Personal Insurance
Life Insurance
Life Insurance financially assists your beneficiaries after your death.
Life Insurance provides a lump sum payout in the event of death or if you were diagnosed with 12 months or less to live. It has a built-in funeral benefit for most providers which is between $15-25K. Coverage is generally available from $50,000.
Beneficiaries generally use the funds to pay off a mortgage, pay for children's education, pay off any additional debt, provide for funeral expenses and future living expenses etc.
Disability Insurance
Total and Permanent Disability (TPD) Insurance supports you financially if you are permanently disabled and unable to work again in any or your own occupation, because of a sickness or injury.
It is generally assumed that you would have the same liability, if not more, than if you were to pass away, as you may require a carer. Cover is generally available from $50,000. TPD Insurance provides a lump sum payout giving you access to medical and rehabilitation treatments of your choice. It also allows you to make any required modifications to your home.
‘Any’ vs ‘Own’ Occupation
‘Any’ occupation covers you if
You are unable to ever return to work in any job you are qualified, trained, or experienced in. This definition can be chosen for TPD held inside Super.
‘Own’ occupation covers you if
You are unable to ever return to your specific job. It is more comprehensive than ‘Any’ occupation but usually more expensive. It also must be paid for outside Super.
Trauma Insurance
Trauma Insurance will pay you a lump sum if you suffer a critical illness or a serious injury e.g., heart attack, stroke, cancer, severe burns, paraplegia, etc.
It helps you to get back on your feet with ease, assisting you financially with your recovery process. In the event you become critically ill or injured, and require extensive health treatment, you are paid a lump sum which can help you get access to the best medical advice and treatment or just cover your living expenses.
Child Trauma Cover
Child Trauma Cover is designed with the whole family in mind. It is a way of insuring children for various trauma events, such as cancer, certain heart and neurological conditions, terminal illness and death.
The sum insured is paid out as a lump sum. The minimum entry age is 2 and the cover stops at age 21 where the policy can then be converted to a Life Insurance policy with attached Trauma Cover.
Income Protection will provide you with up to 70 percent of your pre-disability earnings for the time you are unavailable to work (after an initial waiting period).
Payouts are made through monthly instalments for a nominated period, assisting you in maintaining your household while you are on the mend. You can choose from a range of benefit periods (the maximum time that you are paid for whilst unable to work) and a range of waiting periods (the length of time that you must be off work before the insurer starts paying).
Income Protection
Income Protection gives you financial peace of mind while you are temporarily unable to work due to sickness or injury.
Take into Consideration:
✔ Your current savings
✔ How long you can last financially without an income
✔ How many accrued sick days you have
Waiting Periods
Waiting periods can vary from a range 14 days to 2 years, which includes 14 / 30 / 60 / 90 / 180 / 365 / 730 days.
The longer the waiting period, generally the cheaper the insurance. You also need to consider that payouts are usually made monthly in arrears. This means you may need to wait an extra 30 days before receiving your first payout.
Benefit Periods
Most benefit periods are 1 year, 2 years, 5 years, to age 65 and to age 70.
Level vs Stepped vs Hybrid Premiums
Generally, when you take out an insurance policy, you have the choice of paying either level, stepped or Hybrid Premiums.
Stepped premiums are calculated based on your age and inflation and are cheaper upfront, but usually more expensive in the long run.
Level premiums are generally more expensive to begin with but are designed not to increase based on age except for CPI increases. It can take anywhere from 9-16 years before a level premium becomes cheaper.
Hybrid premiums are a mixture of both level and stepped premiums. They normally start with a stepped premium for some years and then convert to a level premium.
Funding Options
Insurance premiums can generally be funded personally, or by using your Super, or a combination of both. What you decide is up to you - it is your choice.
Your decision may depend on what your budget is, your available cash flow, and if funded through Super you also need to consider the adverse impact on your Super retirement balance.
