Ensuring you are covered with the right type of ‘Life’ insurance is one of the most important responsibilities you have both to your family (whether it be your children… or your parents) and yourself.
When you read ‘Life’ insurance – this does not just cover ‘death’. There are a variety of different types of life insurances which cover you for various possible events, sicknesses or injuries. If you have any dependants, either on a financial basis or a carer basis, or both, there are a number of insurance structures which can help you protect the well-being and lifestyle of you and your loved ones.
WHAT ARE THE DIFFERENT TYPES OF LIFE INSURANCE COVERS AVAILABLE TO ME?
Let’s run over some high level types of insurances and where they may be applicable to you.
Life insurance provides a lump sum payment to your beneficiaries in the event of death.
This one is pretty straight forward. If you have a family or dependants who would be affected in the event of your death (whether it is as a bread-winner, or as a carer), life insurance can be used to provide your family with financial protection to not only pay for final expenses and lifestyle adjustments, but also ensure that they are able to continue to put food on the table and prvide them with some certainty through an already difficult time.
There are a lot of considerations to be mindful of when thinking about the loss of a family member, and covering present and future contribution from that person to the household. An insurance adviser will work with you in determining the right amount of cover to suit your needs.
In the event of death, Life cover may provide for:
- Mortgage, Investment loan debt to clear
- Ongoing living expenses to provide for dependants
- Education Costs for children
Total and Permanent Disability (TPD) insurance
TPD Cover provides a lump sum for Total and Permanent Disablement as a result of sickness or injury.
The lump sum payment provided in the event of Total and Permanent Disability can be used to assist with repaying debt, making necessary lifestyle adjustments and assisting with medical expenses. While disability may not be seen to be as severe as death, the effect of the total disability of a family member can be even more taxing, given the likelihood of an upfront and ongoing financial burden, as well as serious lifestyle adjustments.
It is important to ensure you hve the right definition of TPD policy based on your occupation. An insurance adviser should help guide you through selecting the right product.
In the event of Permanent Disability, TPD Cover may provide for:
- Lifestyle adjustments
- Medical Expenses
- Repaying debt
- Pension funding
Trauma Cover will provide a lump sum payment upon diagnosis of one of the medical conditions as defined by a policy, such as cancer, stroke or heart attack.
Some of the most common trauma claims across the Life Insurance industry are for illnesses such as cancer, stroke, and heart attacks. Often these events are unexpected and require considerable capital to manage and ensure that the person affected is able to focus on getting better, while having access to the best treatment possible, rather than having to worry about the stresses of continuing to generate income for themselves or their family.
In the event of being diagnosed with a critical illness, Trauma cover may provide for:
- Lifestyle adjustments
- Medical Expenses and Treatments not covered by private medical aid or medicare
- Time off work to focus on recovery (for the patient and/or the spouse)
- Travel and specialist doctor consultation
- Childcare costs
Like Trauma Cover above, Child Trauma cover will provide a lump sum payment to assist with the care and medical treatment of a child, upon diagnosis of one of the medical conditions as defined by a policy.
As a parent, the ability to care and provide for our children is one of the most fundamental and emotionally important priorities. Having a lump sum payment in the event of the unthinkable may allow you to take time off work to ensure proper care for your child, and also the ability to afford the best treatment available. For a nominal monthly cost, this is certainly a type of cover that should not be overlooked.
Income Protection provides an ongoing monthly payment if you are unable to work as a result of sickness or injury.
As an income earner, your monthly pay cheque and ability to earn income to fund living expenses is probably one of your most valuable assets.
To put it in simple terms… over a period of 30 years, a rounded salary of $100,000 per year is worth $3,000,000+. If you were unable to work due to sickness or injury, Income Protection insurance offers you the comfort that you and your family would still be able to receive an ongoing monthly income towards living expenses.
In the event of being unable to work due to sickness or injury, Income Protection cover may provide for:
- Income Replacement to cover ongoing living expenses
- Medical costs
OK, SO… WHAT DO I NEED, AND HOW MUCH?
Everyone’s needs are different, and there are a number of considerations that need to be kept in mind when determining how much of each type of insurance cover is most relevant.
As an insurance adviser, I will work with you to establish the best cover for your circumstances. Initially, a Capital Needs exercise will determine your financial goals and objectives, which will then allow us to recommend the appropriate levels of cover and benefits to secure you and your family’s financial future in the event of sickness, injury, or death.
SEEMS STRAIGHT FORWARD – WHY DO I NEED AN ADVISER?
There are significant differences, across a multitude of products, across more than 10 major insurers in the market that need to be considered. As Specialist life insurance advisers, my team at Fairbridge are able to understand the product complexities across the market and tailor to your specific situation and insurance needs accordingly.
Having a Specialist Life Insurance adviser will allow you to implement an insurance portfolio that is specifically tailored to you and your family’s insurance needs, taking into consideration, inter alia, affordability, tax effectiveness and premium structuring.
Ultimately, you will have the peace of mind that in the event of a claim, you or your family have a specialist team with many years of experience dealing with the insurance companies to manage the claims process on your behalf, and a central point of contact who will work with you on sall the necessary applications for the best claim outcome.
My aim is to build long term relationships with my clients as a trusted life insurance adviser that will do the best for you and your family at what is an important and difficult time.
CAN’T I JUST DO IT MYSELF?
There is a misconception that buying insurance online will be ‘cheaper’ than using an adviser, this is almost never the case as the right adviser is able to access extensive products across the market as well as ensure you are getting the most value for your money.
More often than not, the only time a product would be ‘cheaper’ is because it is missing key benefits and areas of cover. Unfortunately, this is only found out at claims stage when it’s too late.
THE VARIOUS TYPES OF COVER AND POTENTIAL SHORTFALLS – HOW THEY STACK UP
CONSIDER THE STATS.
It is only natural to think that we will be one of the lucky ones. Some people have an inbuilt “it won’t happen to me” defence-mechanism to avoid having to think about the worst case scenario. But is taking your chances really worth the risk when you can have insurance in place that will assist you when you need it most?
The stats below point out some of the major medical and accidental risks that all Australians face on a daily basis.
This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication. You should read the Product Disclosure Statement (PDS) before making a decision about a product.