When it comes to insurance, many people adopt a ‘she’ll be right’ attitude, but looking at the statistics, there’s more chance of something going wrong than you might think.
Research has found that one in five families will be impacted by death, a serious accident or illness that leaves a parent unable to work, but 95% of families don’t have adequate levels of insurance to cover this situation.
What types of cover are available?
Insuring yourself and your income can allow you to maintain your lifestyle and living arrangements, and give you comfort in knowing you can still meet your financial commitments—things like your home loan, rent, card repayments, bills, kids’ education fees, and treatment and rehabilitation costs should you need it.
You can buy different forms of personal insurance through your adviser. Here’s a rundown of the four main types of cover available:
- Life insurance pays a lump sum on your death or the diagnosis of a terminal illness;
- Trauma insurance pays a lump sum on the diagnosis or occurrence of a specific illness;
- Income protection typically provides a replacement income of up to 75% of your regular income if you’re unable to work due to illness or injury;
- Total and permanent disability (TPD) pays a lump sum if you become disabled and are unable to ever work again.
How much is enough?
It’s important to choose the right type of insurance for your situation, which will be impacted by your personal circumstances, such as whether you have a partner or children, and the level of your debts.
It’s also important to understand how much insurance you need so you are not underinsured – nor paying for unnecessary cover.
What else do I need to consider?
Some people believe that if they are young or healthy they don’t need life insurance. However, circumstances can change quickly, and it generally costs more to buy insurance when you’re older, so securing cover when you’re young could be a good idea.
Another common belief is that if you get sick or injured the government will pick up the bill. And while it’s true that workers’ compensation and benefit payments may apply in some cases, it’s unlikely any payments will fully replace the income lost, or cover all of your ongoing financial obligations.
If you need more information, speak to us today.