Insurance coverage has been getting plenty of air play and column inches over the past week or two, mainly due to the Hayne royal commission and the poor behaviour from some of the industry participants. Insurance can be as complicated or basic as you wish to make it, depending on your needs, and with that in mind, lets take a timely look at some insurance fundamentals regarding personal insurances.
Personal Insurance Types:
- Life Insurance – Insures the life of a person, payment made to beneficiaries upon death.
- Total and Permanent Disability Insurance (TPD) – Insures a person who is left totally and permanently disabled as the result of a qualifying event. Funds may be used to replace income and pay for rehabilitation and ongoing medical costs.
- Income Protection Insurance – Insures a person against lost income should they not be able to work or earn a living for a determined period of time.
How much insurance cover do you need?
There are many different methods you can use for calculating the amount of life or TPD insurance required. These include;
- Debt cancellation – Having enough cover to pay put all your debt and liabilities, ensuring they are not passed onto your loved ones.
- Debt cancellation & some income – This allows your family to pay off all debts owing and have some additional money to replace income which may be lost as they grieve and adjust to life without the deceased.
- Debt cancellation and income replacement – This level of cover may be appropriate for those families where the deceased was the main income earner or there are children to care for. This allows for debts to be paid out and having sufficient funds which, if invested appropriately, can produce a return to cover the decease’s wage.
How much of my income does my Income Protection insurance cover?
Your Income Protection insurance generally cover 75% of your wage to help supplement your income should you be off work for an extended period of time due to injury or sickness. This does not replace Workers Compensation and is generally for injury or illness which happens outside of the workplace or not covered under the Workers Compensation Act.
People have so many insurance policies nowadays which are essential; house, contents, car and health to name a few, but a lot of people fail to insure their biggest asset, the one thing that is most valuable, that’s worth more than their house, contents and cars combined. They fail to insure themselves, however, it is their ability to work, earn money and provide for their family which pays for everything else. Take away your ability to earn money and you could very well lose all of your other insured assets as well.
For details on insurance solutions to suit you and your family, start a conversation today.
You need to consider with your financial planner (or adviser), your objectives, financial situation and your particular needs prior to making an investment decision. Sensibly Pty Ltd and its authorised representatives (or credit representatives) do not accept liability for any errors or omissions of information supplied on this website
Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
