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Protecting you & your family: what you need to know

November 28, 2016

Insuring your car, home or other possessions makes sense. So why do so few of us insure ourselves? If illness or injury stopped you from working for an extended period, could you keep paying your bills? Personal risk insurance gives you peace of mind that if the unexpected occurs, you and your family will be provided for. 

  • Did you know that 95% of Australian families do not have adequate insurance cover? 1
  • Insuring yourself and your family can be the most important thing you do to protect your family.
  • Talking to us can help simplify the process so you are only covered for what you need.

Why do I need it?

While we recognise the emotional impact of events such as serious illness or death, the financial consequences can be equally devastating. If the unexpected did occur, having personal risk insurance can go a long way to helping you and your family meet your basic living expenses such as your mortgage, groceries, petrol or school fees. Depending on the event, you may also need to cover significant medical expenses, rehabilitation, modifications to your home or services to help maintain your lifestyle.

There are four main types of personal risk insurance:

Life insurance

A lump sum payable on death or terminal illness. This can help support your dependants to maintain living standards or pay off debts.

Total and permanent disability (TPD) insurance          

A lump sum to help support you if you are totally and permanently disabled due to illness or injury.

Income protection insurance          

A monthly income stream to help support you if you are temporarily unable to work because of illness or injury.

Trauma insurance       

A lump sum to help support you if you are diagnosed with a specified major medical condition (e.g. heart attack, stroke or cancer).

 

Some of the policy features may include:

  • the amount of benefit payable upon claiming
  • the waiting period before benefits are paid
  • how long benefits will be paid out for

Before taking out personal insurance, consider the policy features carefully and seek our professional advice to assist.

Can you afford personal risk insurance? 

When you consider your existing financial commitments and level of savings, how long could you be without an income before you would need to use your savings or sell the house? The cost of premiums for any personal risk insurance policy reflects both the risk (probability) of an insured event occurring and specific features of the policy. Some typical risk factors are your age, the state of your health, your occupation and the type of recreational activities you participate in.

Insuring through superannuation

Acquiring life insurance through your superannuation fund can provide some tax concessions which are not generally available for life insurance policies held ‘outside super’. For example, by claiming a tax deduction for personal contributions to superannuation or making salary sacrifice contributions from your pre-tax income, you can effectively pay your insurance premiums from your pre-tax income. This could make it significantly cheaper (on an after-tax basis) for you to insure through superannuation. Also the trustee of the superannuation fund may be able to claim a tax deduction on the premiums for life, TPD and income protection insurance. This could also reduce the cost of cover. Not all types of personal risk insurance is available through your superannuation fund. New rules came into effect on 1 July 2014 that restrict the types of new TPD and income protection policies that can be purchased through superannuation, while new trauma policies are generally prohibited.

Ways we can help

  • We can help decode the various insurance policies and find the right mix of cover to suit your needs.
  • We can outline the pros and cons of insuring inside or outside of super, waiting periods, different insurance providers and premiums.
  • We can ensure your current level of income is protected should the unexpected happen – so your family have financial security and you can recover in comfort.

If you would like more information about the benefits of personal risk insurance, and the peace of mind it can offer, please contact our office on 07 3217 2477.

1 Lifewise/NATSEM Underinsurance Report – February 2010.

General advice warning: The advice provided in general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product. McGarry Partners Services Pty Ltd ABN: 10 010 821 360 is an Authorised Representative of Count Financial Limited. ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.