As individuals, we insure our possessions but don’t always insure the most important thing – ourselves.
If something was to happen to you, how would it affect the future of your family finances? Without your income will your family be forced to sell the home? Would your spouse be forced to work two jobs just to get by? Would your kids miss out on daily essentials?
Below is a basic review of insurance cover:
1. Income Protection Insurance (Illness & Accident)
This will provide payments if you are unable to work for a certain amount of time if you are sick or injured outside of work. If you are injured at work you are typically covered by Workcover (if you are an employee) this is an important policy to have for the main breadwinner of the family.
Income Protection usually offers covers for up to 75% of your gross wages for a maximum time period (e.g. 2 years or to the age of 60). You will need to pick a waiting period when selecting your level of cover (often 30 to 90 days) – before you can make a claim.
2. Trauma & Critical Illness Insurance
This will pay a lump sum benefit if the individual suffers a major medical event (i.e. cancer, stroke, heart attack etc). The benefit is paid regardless if the individual is able to work or not. Benefits can be used to pay down debt, seek specialist medical treatment or make lifestyle changes (taking time off for treatment or reducing work hours).
3. Total & Permanent Disability (TPD) Insurance
This provides cover if you are totally and permanently disabled and unable to work. The lump sum payment can be used to pay down debt, seek medical advice and make lifestyle changes (i.e. move to a home that is more accessible for your new condition). Some policies will cover if you can’t work again in your USUAL occupation, whilst some cover if you can’t work in ANY occupation – so it’s important to read the fine print.
4. Life Insurance
This provides a lump sum payment to your nominated beneficiary on your death or being diagnosed with a terminal illness (access this cash earlier). If you have not nominated a beneficiary on the policy the payment will be distributed according to your Will. The purpose of life insurance is to provide your family with financial security if you were to pass away. This is common policy to have for families when there is debt on the home as the fund can be used to pay down debt or supplement lifestyle without your future earnings. The level of cover can vary dramatically depending on the individual’s needs.
NOTE: If you would like to know how to change your cover, please contact an insurance broker who can tailor your insurance to your needs.
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