Most people tend to keep their car insurance, health insurance and home and contents insurance up to date, but they forget about insuring their most important asset of all – themselves! In fact, a recent study of Australian’s showed that of the 83% of people who said that they have car insurance, only 31% of these people also had income protection. But if you have no income, how would you pay for your car insurance? Or any of your basic living expenses for that matter, let alone luxuries like holidays, eating out or a round of golf!
People tend to ‘set and forget’ their personal insurances such as life insurance and income protection, meaning that they set it up once and then never look at it again. But the problem with this is that our finances and lifestyles are forever changing, and so it is unlikely that what you set up originally is going to be the right insurance for you forever.
We hear a lot of people say “I think I have insurance in my Superannuation”. Although this may be true and you may have some cover within your super, the majority of people don’t actually know what cover they have, or how much they are covered for. More often than not, this is a very basic and generic level of cover and may not be suited to your lifestyle or needs at all.
Recent studies show that although 92% of the Australian working population have Life Insurance, only 42% of these people have enough Life Cover to provide the same standard of living for their families if they were to pass away. That’s a total of around 16 million under insured Australians!
We spoke with a Senior Financial Planner from Viridian Advisory who gave us a brief description of the 4 main insurance types and what they cover you for.
Life Insurance pays a one-off lump sum amount of money when you die. The money will go to the people you nominate as beneficiaries on your policy. If you have not named someone on your policy then a Trustee or your estate will decide where the money goes. This is designed to support your loved ones with ongoing debts, living expenses and funeral expenses.
Total and Permanent Disability
TPD Insurance provides a one-off lump sum payment if you are totally and permanently disabled and it is designed to help with the costs of rehabilitation, debt repayments and future living expenses. There are two variations of TPD insurance, one which covers you in the event that you can’t work again in ANY occupation, and one which covers you if you can’t work in your OWN/USUAL occupation. It is very important to make sure you know which type of cover you have.
Trauma Insurance provides cover if you are diagnosed with a specified illness such as a cancer, heart attack or a stroke. It pays a one-off lump sum amount directly to you, which is designed to assist with medical costs, ongoing debt repayments and living expenses.
Income Protection, also known as salary continuance, is an insurance that pays you a regular cash amount in the event that you are unable to work as the result of an accident or illness. It generally covers up to 75% of your income for a set period of time.
With all of the above-mentioned insurances, there are different factors and variations, so it is definitely worth sitting down with a trusted advisor and going through the best options for you, and ensuring all of your insurances are set up correctly.
So, whether you’re buying a new home, changing job, setting up your own practice, getting married or have just had a baby, there is never a bad time to review your insurances and make sure you have the right cover in place. Here at Credabl, we care about you, and we like to make sure that you have the right cover in place for your individual circumstances.
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This article is a guide only. It does not constitute any recommendation on behalf of Credabl Pty Limited ACN 615 968 100, Australian Credit Licence 499547 or any of its related bodies corporate (Credabl). Whilst the information contained in this document has been prepared with all reasonable care and after due inquiry, it is general information only and is not intended to provide you with financial, tax or legal advice (Information). You should obtain independent financial, tax and legal advice as appropriate. No representation or warranty (express or implied) is provided as to the accuracy, reliability, reasonableness or completeness of the Information. The recipient must make its own independent assessment of the Information after making further inquiries.