26 Oct 2023 | Blog

Hitting an insurance home run


Insurance is often a topic that makes people either snooze or shiver. Regardless of your emotional reaction, risk management is an essential aspect of our modern lives. Let’s navigate through the bases to ensure your financial ‘home run’ is as smooth as possible.

First Base – Income Protection

In the fiscal year 2020/21, more than 130,195 Australians submitted substantial workers’ compensation claims. Have you ever wondered what your financial landscape would be if you suddenly couldn’t work?

For the majority of us, our capacity to generate income is our most prized financial asset. When compared to the combined value of a home, several cars, and maybe even a boat or caravan, your future earnings could easily overshadow them all. Despite this, many people inadequately protect their income, leaving them vulnerable to financial difficulties if a health issue arises. Considering nearly half of us are statistically poised to take more than a three-month work hiatus due to health concerns, Income Protection should be your starting point in personal insurance.

Income Protection, also known as Salary Continuance, could supply you with a regular payment—typically up to 75% of your standard income—if you’re incapacitated by sickness or injury. These benefits are taxable and commence following a designated waiting period. They continue until you’re back at work or when the predetermined benefit term ends.

Second Base – Life and Permanent Disability

Life Insurance grants a lump sum if the policyholder passes away. But what if you’re left unable to ever work again in your chosen field? Total and Permanent Disability (TPD) insurance is there to cushion the financial impact with a lump sum payment.

Many individuals low-ball the amount of life insurance they genuinely need. The coverage should be enough to eliminate debt, cater to future obligations such as educational expenses, and replace the deceased’s income until their planned retirement age. If you’re the primary earner or caregiver, your cover may need to be upwards of $1 million to offer adequate financial security.

Third Base – Trauma Cover

Trauma Insurance acts as a bridge between Income Protection, Life, and TPD insurances. Created by a medical doctor who observed financial stress hindering his patients’ recoveries, this insurance type provides a lump sum upon the diagnosis of specified illnesses like cancer or heart attack.

Unlike Income Protection, which triggers a payout irrespective of the illness type, Trauma Insurance payments are condition-specific, not linked to the extent of disability. It aims to alleviate out-of-pocket medical expenses and allow for a stress-free recovery period. It shouldn’t replace other types of personal insurance; instead, a robust insurance portfolio comprises Life, TPD, Income Protection, and Trauma Insurance.

Home Base – General Insurance

Many people cover their homes, cars, and other assets. The key consideration is to ensure that all items are insured for their full replacement value. Insurance providers often offer calculators to help you gauge the appropriate coverage level. Don’t neglect special items like jewellery or artwork; these usually need to be explicitly itemised in the policy.

A Super Way to Insure

Most superannuation funds provide options for Life and Permanent Disability Insurance. These funds can often secure wholesale rates, resulting in potentially lower premiums. Moreover, these premiums are taken from your super balance and are tax-deductible to the fund, making it a more affordable avenue for many.

Find a Coach

The world of insurance is intricate, requiring expert advice to navigate effectively. Every type of insurance plays a unique role, and a skilled advisor can help you tailor the right combination for your needs. It’s also crucial to consult an expert before letting any policy lapse to understand fully the potential fallout.

We’re here to help with your insurance needs and suggest a plan that fits you and your budget perfectly. After all, nobody wants to be left stranded before even reaching first base.

The information contained on this website has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs. You should, before you make any decision regarding any information, strategies or products mentioned on this website, consult your own financial adviser to consider whether that is appropriate having regard to your own objectives, financial situation and needs.

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