If you are suddenly diagnosed with a major illness or experience a death in the family there is very little time to plan how the family will cope financially.
You might be thinking insurance is something you can sort out later but research shows that 1-in-5 Australian families will be impacted by the death of a parent, a serious accident or an illness such as cancer that leaves a parent unable to work during their working life. Yet 95 per cent of families do not have adequate levels of life insurance * There are things you can do to ensure that you and your family are covered.
UNDERSTAND THE DIFFERENT COVER TYPES
Unlike general insurance which covers assets such as your car and your home, life insurance can protect the financial contribution you make to your family.
There are different types of life insurance that generally cover different life events:
- Life cover provides security for your family’s future by paying a benefit if you die or are diagnosed with a terminal illness.
- Income protection can help replace a part of your income (for a set period of time) which can be used to cover living expenses if you are unable to work due to illness or injury.
- Total and permanent disability (TPD) cover can provide financial support if illness or injury stops you from returning to work or normal domestic duties.
- Trauma cover allows you to protect yourself against the financial impacts of being diagnosed with one of a number of serious medical conditions, such as cancer or a heart attack, by paying a benefit.
In practice, you may need a combination of these products depending on your family’s needs and existing financial resources.
The best way to plan for your family’s future financial security is to ask ‘what if ?’. What if one parent died or was unable to work due to an accident, illness or permanent disability? With the loss of an income you and your family could struggle to meet their daily expenses and ongoing financial commitments.
While families with children have an added incentive to have adequate life insurance cover, young couples and singles may also need protection. What if you become critically ill and need to take time off work? Do you have enough sick leave to cover the rent or mortgage and other living expenses?
Once you have a clearer idea of the amount of money you would need to preserve your family’s current lifestyle, it’s easier to work out the right level of cover for your circumstances.
Life insurance and income protection insurance allows you to approach the future with confidence, knowing that the life you’ve built is protected.
As a financial adviser, I can help you determine the types and level of cover that you need to ensure so you protect your most valuable asset – you. Call me on 0893492700, and we can discuss this further.
* Lifewise/NATSEM Underinsurance Report – Understanding the social and economic costs of underinsurance, Feb 2010