Have you ever thought about what would happen if you were unable to work due to injury or sickness? Imagine what your family’s life would be like if you or your partner died? Would you be able to survive financially?
It is important to review your life insurance regularly, especially if something has changed in your life, for example, if you’ve taken out a home loan, are having kids or starting a business.
Types of Insurance
There are many different types of cover that fall under the broad heading of life insurance.
Depending on your circumstances you may need one or more of these:
- Life Insurance pays a set amount of money when the insured person dies. This can be a significant benefit to your family as they won’t have to worry about money. It is paid to the people you nominate as beneficiaries on your policy.
- Total and Permanent Disability (TPD) Cover – covers the costs of rehabilitation, debt repayments and the future cost of living if you are totally and permanently disabled. TPD cover is often bundled together with life cover.
- Trauma Cover – provides cover if you are diagnosed with a specified illness or injury. These policies include the major illnesses or injuries that will make a significant impact on a person’s life, such as cancer or a stroke. It is also referred to as ‘critical illness’ cover or ‘recovery’ insurance.
- Income Protection – replaces the income lost through your inability to work due to injury or sickness. It usually offers covers for up to 75% of your gross wages for a maximum period (e.g. 2 years or to age 60). Some policies may be stepped or level, so make sure you understand what policy you are getting. Income protection is particularly important for self-employed persons, small business owners or professionals whose business relies heavily on their ability to work.
It is also useful to have an emergency fund to help you through the initial stages of not being able to work due to sickness or injury (due to waiting periods). This can alleviate supporting your family when times get tough and the never-ending bills, school fees, mortgage payments and everyday living costs continue.
To help you with an ‘emergency’ savings plan and the right insurance, it is important to discuss your insurance needs with your financial adviser.
Get in touch with us today for a confidential discussion.
This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.