A Beginner’s Guide To Personal Insurance

The world of personal insurance can be daunting. It sounds costly, time-consuming and let’s be honest, you don’t want to think about what will happen if you were to get hit by a car or if you suddenly receive a dreaded cancer diagnosis.

Unfortunately, personal insurance is extremely important – just as if not more so than health insurance, car insurance and home insurance – in helping to safeguard you and your family.

But where do you even begin? Let’s start with looking at some of the different types of personal insurance and why you might need them.

Life Insurance

Life insurance is important for someone who has loved ones that would be financially impacted if you were to pass away. It is a lump sum payment, payable upon death or terminal illness with less than 12 months to live. Life Insurance payments can be used for mortgage repayments, funeral expenses or even just to provide your family with financial security in the unfortunate event of your death.

Total & Permanent Disability Cover (TPD)

As the name suggests, Total & Permanent Disability Cover provides cover in the event you are totally and permanently disabled. No one wants to think about what their life would be like if that were to happen, but there is some comfort in knowing if you were in a tragic accident or suffer a stroke where you physically cannot return to work, you would receive a lump sum payment that could help with home modifications, care, and other expenses to help you live a comfortable life.

Income Protection

You insure your car and your home, but why not your income? Income protection pays you a regular income for the period you are unable to work due to sickness or disability. Depending on your policy, payments can last up till retirement age.

Trauma

Trauma Cover is a lump sum payment if you suffer a traumatic event or are critically ill. This can include cancers, strokes depending on the insurer. Trauma payments are often used as an emergency fund to help cover out-of-pocket medical expenses and other living costs.

The cost

This really depends on your age, your medical history, your occupation, your level of cover and your structure of cover. Don’t worry if you’re strapped for cash – there are different ways you can structure your policy to make it more affordable and even protect your personal cash flow. As example of this would be paying for your policy with your super or linking certain policies together. Also, some types of insurances are tax deductible, like income protection when it is owned personally.

There generally isn’t a cost to sitting down with an adviser and setting up your insurances – they are paid in commission directly from the insurer at no cost to you.

The process

Making decisions about your insurance cover can be overwhelming, but when you sit down with a financial adviser, they will help you with deciding which types of insurance and how much of it you will need.

Once you have decided on the type and level of cover that you want with your adviser, they will research different insurers to find one best suited to you – taking into consideration any medical conditions you may have. Generally, you will then go through an underwriting process online or over the phone where you will need to answer medical and lifestyle questions before your policy is issued to you.

Organising your personal insurances can be a tedious task but one that should be important to you and your family. In an ideal scenario, you will never have to claim on it, and it will just be a money loss. But unfortunately for many people this is not the case and having those policies in place can be the difference between keeping or losing your family home whilst going through a tragic or traumatic event. It is worth paying those premiums for peace of mind so that if something happens to you, you and your loved ones will be looked after.