Financial Protection - Insurance Planning
Delivering You Financial Peace Of Mind
We all know life is full of uncertainties – unfortunately some of these uncertainties can potentially harm or even ruin us financially. That’s why financial protection is so important. Financial protection can give you peace of mind so no matter what happens in life you can be secure in the knowledge that at least financially you’ll be able to cope. If you were to die or become unable to work due to partial or total disability would your assets be protected and secure?
Don’t let bad luck decide your financial future. Financial protection insurance is often overlooked when developing a financial plan, although it is one of the best forms of protection against life’s calamities, including financial hardship caused by serious illness, injury or death.
Do Australians have the right priorities in life?
Life is about enjoying the things that matter to you most. Most employed people have some insurance through their super; however, research has consistently shown that the level of cover leaves many exposed to the risk of financial hardship in the event of accident, sickness or death.
Why is this a problem? More than three in four Australians will be diagnosed with a serious illness in their working life. The majority will rely on savings, selling assets in an uncertain property market or government welfare. A significant proportion of Australians would face financial hardship if they were to have an accident, become sick or die. While most insure their home and would never consider driving a car without motor insurance, less than a third of Australians insure their most important asset, their income.
60 per cent of families with dependent children do not have enough insurance to cover the household expenses for a year if the family breadwinner were to die.
The Victorian bushfires in February 2009 highlighted just how important it is to have enough cover in place. Many people died or were injured and unable to work. Around 80 per cent of those people did not have basic life insurance policies in place. Many of those who were covered had insufficient sums insured to support their families financially in the aftermath.
It is wise for you to review your insurance needs as and when your circumstances change. For example, when taking out a mortgage, getting married, starting a family or building a business. No matter what your circumstances are, life insurance helps preserve your financial freedom, allowing you to enjoy the life you want for yourself and your family.
It is important to insure against death and total & permanent disablement for both the income and non-income earning partners. Your partner may contribute significantly to such duties as childcare and home maintenance and in the event of their death or disability the cost of hiring professionals to provide these services could be considerable. It may also be very expensive to provide care for your partner should he or she become permanently disabled.
The cost of the insurance for both partners depends on the type of cover selected. A regular review of your cover is necessary to ensure you are not under-insured or over-insured.
Tax deductibility is available for certain types of insurance cover and it is therefore important that your insurance is structured in such a way as to take advantage of any tax concessions for which you may be eligible.
In determining the most appropriate policy you should aim to achieve a balance between affordability and the most favourable policy conditions. In assessing the amount of cover required, you should consider:
- Current levels of assets and liabilities.
- Income required to maintain your family’s standard of living.
- Costs of a housekeeper or day care should these services be required.
- Costs of caring for a totally and permanently disabled person.
At the time of illness/injury, you will be required to submit a claim to the insurer with medical proof of your illness/injury and the original policy document. This will then be assessed by the claims department and should all requirements be met, a benefit will be paid.