It’s easy to put off thinking about your personal insurance while you’re young and healthy. But the truth is, we never know what’s around the corner – and with around half a million Australians hospitalised each year due to injury[1], it’s worth thinking ahead about how you and your loved ones would manage financially if something happened to you.
Here are three types of insurance to put a financial safety net in place – for ‘just in case’.
1. Income protection
You may be surprised to know your most valuable asset isn’t your house – it’s your ability to earn a living. So if you’re sick or injured and can’t work as a result, you need to have a backup plan in place.
While workers’ compensation can help in some circumstances, it won’t cover you if you’re self-employed, or if your illness or injury isn’t job related – like, if you have a car accident, a mishap on the sports field or an ongoing sickness.
That’s where income protection insurance can help. If you can’t work because of illness or injury, Income Protection can pay you a percentage of your normal salary, to help you get by while you’re off work.
You can choose how long you want to receive the benefit and when you want payments to kick in – say, after 30 or 90 days, although some policies offer benefit payments retirement age.
The best news is, Income Protection premiums are generally tax-deductible, making cover more affordable. Speak to your adviser to confirm your eligibility.
2. Life and Total & Permanent Disability (TPD)
If you have a partner or a young family who rely on you, you’ll want to make sure they would be financially secure if something happened to you. This is where life insurance can make all the difference – by paying a lump sum to you or your dependants if you become terminally ill or pass away. You can generally take out a policy through your super, so the premiums won’t affect your day-to-day cashflow. The default level of cover you may get through your employment can often fall short, so you should always check with an adviser to make sure it’s enough to cover your family’s needs.
Many Life policies also include Total and Permanent Disability cover, which can pay a lump sum if you’re unable to ever work again due to a disability. According to a recent report, the average working person needs disability insurance worth about 84 per cent of their income, but this figure will vary from person to person.[2]
3. Critical Illness Cover
A serious illness can set you back financially – keeping you off work at a time when you’re trying to meet mortgage payments and everyday expenses, and adding extra medical bills to the mix.
Critical illness insurance can pay out a lump sum if you’re diagnosed with one of a range of common major illnesses, like heart attack, cancer or stroke. The money can help you can get the care you need and stay on top of your living costs, so you can focus on getting better without financial stress.
Critical illness cover isn’t just for the breadwinner in your family – it can help pay for the extra childcare and household costs that arise if the homemaker falls ill, or enable your partner to take time off to help you recover.
Get advice
The level of cover you require depends on your personal circumstances, so it’s a good idea to seek professional advice. With the right insurance you can create a financial safety net for your family, so you can be confident about your family’s financial future, regardless of what happens.