On July 11, 2016

So You Think You Don’t Need Insurance, Think Again….

Insurance gives you peace of mind so that if anything happens to you, your family or your business that you will be financially secure. In essence, insurance protects you against the risk of the unknown and is there to help you to pay out-of-pocket expenses. It is important to assess your life and your needs when considering insurance.

  1. Life Insurance
    You will need life insurance to protect your surviving family, who most likely depend on your income. There are different types of cover that fall under this category. Depending on your individual circumstances, you may need one or more of the following:

    • Life cover also known as ‘term life insurance’ pays a set amount of money when you die. Your nominated beneficiaries on your policy will receive the monies.
    • Total & Permanent Disability (TPD) cover – pays a lump sum to assist with rehabilitation and living costs if you are totally and permanently disabled.
    • Trauma cover – provides cover if you are diagnosed with a specified illness or injury. These normally include major illnesses or injuries that will make a significant impact on your life, such as cancer or a stroke. It is sometimes referred to as ‘critical illness cover’ or ‘recovery insurance’.
    • Income Protection – replaces the income lost through your inability to work due to injury or sickness.
  1. Disability Insurance
    Should you become disabled, how would you cover your living expenses? How would you be able to save for retirement? Because an overwhelming majority of disabilities are health related, can you afford the risk of being without a paycheck and possibly having increased healthcare expenses? Protecting your income by purchasing disability insurance is a fundamental risk management strategy for those whose income is required to maintain their lifestyles. The two primary types of disability insurance include:

    • Short-term – Coverage that will provide income replacement protection, usually after one week of disability, and will pay for up to six months.
    • Long-term – This type of disability insurance kicks in generally at the six-month mark and continues until age 65.

You may also have disability insurance cover through your employer which typically provides cover for between 60% – 70% of your current gross salary. It is worthwhile to check this, however, if you are struggling to make your lifestyle ends meet on 100% of your current salary, consider how your finances will work on approximately 60% – 70% on what you are currently earning.

  1. Health insurance
    The last thing you would want to worry about when you are sick and need ongoing medical treatment is how to pay the bills. Private health insurance can help reduce the cost of hospital fees and other medical expenses (not covered by Medicare) so you can focus on getting better.Also remember that all Australians have to pay a Medicare levy via income as part of tax. If you earn over a certain amount and do not have private health insurance, you may have to pay an additional Medicare levy surcharge of between 1% – 1.5%. If you are on a high income, it may be better to purchase health insurance than pay the additional surcharge.
  1. Car insurance
    If you own a vehicle you will need car insurance. Depending on the value of your vehicle and your state’s requirements, the type of car insurance you should carry will vary.
  1. Home insurance
    Home insurance covers the cost of loss and damage to the building you own and contents insurance covers the cost of loss or damage to your furniture, effects and general possessions. They are often bundled together as ‘home and contents insurance’ package, however, be aware that they are actually separate policies so you will need to work out what cover you need for each.It is important to not just compare the prices of the policies, but rather compare what is covered and what is excluded. You should also check if the policy offers any additional benefits.

Storms, Floods & Fires Insurance – it is also important to consider “Storms, Floods & Fires” insurance. Having your home damaged or destroyed in a natural disaster is devastating. To find out if you are in a natural disaster prone area you should contact your insurer, your local council and/or your state emergency service or local fire services authority.

There are other types of insurance including funeral insurance, pet insurance and various forms of business insurance; however, these are not covered in this blog.

If you would like more information on the insurance listed above, please talk to one of our TAG Financial advisers today.

 

This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.

  • 0 Comments   

    0 Comments

    Leave a Reply

    Your email address will not be published. Required fields are marked *