Personal insurance advice & planning

You probably have insurance for your home, car and other assets (like your mobile phone). However in our busy lives we often overlook personal insurance - and this brings the risk that you or your family could struggle financially if the unexpected occurred.



Different types of personal insurance

With so many types of personal insurance available; it often becomes hard to work out what you actually need. This quick video may shed some light on your options - watch now.

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It can all change in the blink of an eye

It's easy to assume 'it'll never happen to me' but none of us are immune from illness or injury, and the lifestyle you’ve worked so hard to enjoy can quickly be replaced by financial struggle. It makes personal insurance an essential part of your wealth creation plan.

1
Income protection insurance

Our ability to earn an income is a tremendous asset, and income protection insurance takes care of it by providing an income stream usually worth around 75% of your normal wage if you can’t work because of illness or injury. The premiums are normally tax deductible, making cover more affordable.

2
Life insurance

Life cover supports your family with a lump sum payout if you die. Many Australians have some level of life cover through their superannuation fund though it’s vital to check you have the right level of cover.

3
Critical illness insurance

It’s easy to take good health for granted yet illnesses like heart disease and cancer affect many working age Australians. Having protection can help keep your life on track financially while you deal with the process of recovery, and can help you afford access to the specialists and specialised treatments you may need.

4
Total & permanent disability insurance

Total and permanent disability (TPD) insurance pays a lump sum if you suffer a total and permanent disability. It’s money that can be used to pay off your mortgage, make essential renovations to your home and/or provide valuable financial support to let your family to maintain their quality of life.

Excuse busters

Nobody wants to think about insurance until they actually need it. By then it's too late. More than 1 in 5 working age parents will become seriously ill, injured or pass away1.

It may be an uncomfortable topic to think about, but it is better to be prepared - it will make the world of difference to your family if the unexpected occurs.

1National Centre for Social and Economic Modelling (NATSEM), 2010.

The earlier in life you take out cover, the more competitive the premiums. Your health will impact whether your cover is approved and the cost, so it’s better to take out cover when you’re healthy!

You may not have people depending on you, but do you really want to leave a legacy of debt for your family to deal with? And unless you don’t mind couch surfing, it’s wise to have a financial safety net in case you find yourself unable to work.

Our income is critical to our lifestyle. 1 in 3 Australians would run out of money within just a few weeks if faced with a sudden job loss2. It’s better to pay out a few dollars each week to ensure money keeps coming in, than deal with the stress if your income stopped entirely.

2D&B Consumer Credit Expectations Survey, September quarter 2012

While they may want to help you, your family may not be financially able to meet your expenses as well as their own. You might need a higher level of care than your family can provide. It can place a huge strain on everyone involved. Would you really want to put your family in that position?

You may get a limited amount of sick pay from your employer if you receive a salary, but it won’t last long. Workers’ compensation is unlikely to be enough and is solely for work-related injuries. There are government payments that replace income while you’re sick, but the amounts they provide are relatively small.

There’s the cost of initial treatment then rehabilitation. Some of these might be covered by private health insurance and Medicare, but there are limits and exclusions. You are likely to need serious cash to cover the gaps which could be exceeded quickly if you suffer a serious injury or illness.

Superannuation is an investment. While setting up insurance through super can be a good strategy, you also need to be aware of the risks and limitations3. For example, super funds that offer members predetermined insurance amounts typically won’t even cover the mortgage on your family home. Also, premiums for insurance through super can substantially eat into your retirement savings over a long period of time. Regular reviews with your financial adviser will help you make sure you have the right plans in place.

3www.lifewise.org.au

As an example, only 2.4% of claims are knocked back by life insurers4. That’s due to three things: non-disclosure, non-payment of premiums (the policy has lapsed) or fraud. As part of our service, and at no additional cost to you, your adviser will work to ensure the process is quick, painless and the claim is assessed promptly.

4The Risk Store, www.theriskstore.com.au

Personal Insurance FAQs

FinChoice offers life insurance, mortgage protection insurance, income protection insurance, car insurance, home building and contents insurance, lenders mortgage insurance, and landlord insurance.

Insurance is a great way to manage the risks associated with unforeseen circumstances and disasters. By insuring yourself and your assets, you can protect you and your family from financial problems and stress should an unexpected event occur.

You can insure most things, but what options you choose will vary on your unique set of needs and circumstances. To work out what insurance products are right for you, make sure you speak to your FinChoice and financial adviser.

As a general rule of thumb, it is a good idea to review your insurance needs as soon as you purchase an asset (property, vehicle, business etc) or have a change in circumstances (new job, get married, have a child etc).

When it comes to taking out insurance, it is important that you do not delay the process. The sooner you insure yourself, your family and your assets, the quicker you can rest easy in the knowledge that you are protected should unforeseen circumstances arise.

You may not realise it, but your super may offer you some level of life insurance as well as other insurance cover. As such, if you try to organise all your insurances yourself, you may find that you double up in some areas. For this reason, it is important that you deal with a professional. At FinChoice, our financial advisers are on hand to advise you as to the best insurance products for your needs.

A financial adviser can assess your life stage as well as your current and future needs, and based on this, recommend what insurances you should consider.

Insurance costs will vary depending on what type of insurances you have, the product and the insurer.

You can pay for your insurance via mail, in person, over the phone, or direct debit. In addition, some of your insurance costs may be paid through your superannuation. Speak to your financial adviser for more information.

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