21 January 2019
The best thing you can do for your family is protect them financially by having personal insurance.
Most people are aware of insurance cover for unexpected death, but there are other life events that could have an equally damaging financial burden.
Major illness or traumatic accident can dramatically change your life and severely impact your ability to generate income.
Along with life insurance, cover for major illness, disablement and general income protection are just as important in protecting your family from financial stress in the event of a traumatic incident.
It’s equally important to ensure an adequate level of cover to provide optimum protection for you and your loved ones.
Below is a guide to the most common types of personal insurance and how they may apply in different situations.
Life insurance
A lump sum payment to your nominated beneficiaries to help them maintain their standard of living and not be left with the burden of major debts.
It is advised to have adequate cover to pay any substantial debts (e.g. mortgage) and provide your dependents with enough money to replace your income.
Total and permanent disablement cover (TPD)
If illness or injury results in total and permanent disablement, TPD cover will pay a lump sum to cover associated medical costs and provision for resultant lost income.
Trauma (crisis) insurance cover
This type of insurance can be used in the instance of a traumatic event (e.g. heart attack, cancer or stroke). Paid as a lump sum, trauma cover can be used to cover associated medical and recuperation costs.
Income protection insurance
Income protection insurance is designed to provide financial relief in the event of being temporarily unable to work due to illness or accident. The cover can be used to meet general living expenses and financial obligations during the recovery period.
Income protection insurance premiums are generally tax deductible. These policies are also commonly available through superannuation funds, who are able to claim the tax deduction and reduce the premium cost.
Choosing the right cover
Which cover is right for you? We always recommend you seek professional advice when determining the type and level of cover appropriate for your individual needs.
The team at Shakespeare can advise on the best products and level of cover that’s right for you.
The below set of questions can also help you start thinking about how insurance may offer protection for you and your family.
If any of the below scenarios apply to your current situation, you may want to consider your insurance options, depending on your personal circumstances.
- If you have any of the following:
- Credit card
- Personal loan
- Car loan
- Mortgage
- Other personal debts (do you owe money to family or friends?)
- If you are self employed
- If you have a dependent family
- If you have ageing parents who rely on you
- If you are in a relationship and you rely on both you and your partner’s income to remain financially secure
- If you do not have adequate sick leave to cover a prolonged recover period away from work after illness or injury
- If you are unable to contribute to your superannuation in the absence of a regular income
For more information, contact the team at Shakespeare on 9321 2111 to discuss how these personal insurance options may apply to you.
General disclaimer: Our firm provides the information on this website for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles on this website are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose
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