Personal Insurance is an important part of your financial plan. We have written a few blogs about how a passive approach to your insurances can be costly when it comes time to claim.
Reviewing your insurances can be a daunting process. There are multiple types of personal insurances, each with its own definition and options which can be a minefield for many.
To simplify the process slightly, we have set out 3 steps that you can use to assess your current protection:
Understand what Personal Insurances are available.
Personal Insurance exists to protect you and your family from the financial effects of illness, injury or death. There are four main types of Personal Insurances: Life, Total and Permanent Disability (TPD), Trauma and Income Protection. We have set them out in our article.
Understanding why each of these insurances exists and under which circumstances they will pay a claim, will allow you to have a more informed review of your insurance portfolio.
Review your Superannuation and Know Your Level of Cover.
It seems strange to review your Superannuation when you are looking at insurance. However, the majority of us with superannuation funds have a level of insurance within them. The type and amount of insurance within your super will differ from fund to fund, so reviewing your specific fund is an important step.
Insurance cover through superannuation has contributed to a decrease in underinsurance in Australia, but it is still an issue. In their report Underinsurance in Australia 2020 Rice Warner found:
- Underinsurance is greater for those with young children.
- On a basic level, current level of insurance held covers 92% of death needs but only 29% of TPD needs. This is more alarming when their findings show that “TPD needs exceed the needs for death insurance, more so at younger ages and particularly when there are no dependants.”
Even once established, reviewing your levels of cover periodically is imperative. Reviewing annually would be good, especially if you have significant life events as we set out in our article. “Why it pays to review your cover.”
Still confused? Seek Help!
Personal Insurances are not straightforward. Each insurance company may offer something slightly different – multiple options, different definitions, ownership and taxation implications. Your level of cover should also be a calculated amount. You don’t want to be under or overinsured.
Personal Insurance is an important part of any financial plan. Professional Advisers understand all the ins and outs of insurance and can tailor an insurance portfolio that will give you the peace of mind that you and your family are financially protected. Schedule a no-obligation Discovery Chat with us to explore how professional advice can help you.
Authorised Representative of RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429. The information provided in this document, including any tax information, is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser.