Along with Income Protection Insurance there are 3 other important personal insurances that you need to consider as part your financial plan, these being; life insurance, trauma cover and total/permanent disability insurance. Having the appropriate types and levels of these personal insurances in place will bring significant peace of mind for you and your family. It will also allow you plan for the future will certainly and security.
At Select Advice Financial Planning we will assist and guide you through the various personal insurance options and ensure that our recommendations meet your needs for today and for the future. We can design and structure a total personal insurance protection package to protect against loss of income, disablement, serious illness and death.
While car and home insurance are relatively straightforward, personal risk cover can be complex with many different options and levels of cover to choose from. We can help you decide which cover is right for you and what issues you need to consider. For example, which family members would you insure? When does it make sense to insure a non-working spouse? How should the benefits of any payment be distributed? What benefits are available within your Superannuation Scheme? What are the tax implications of taking out personal insurances?
Importance of having life insurance
We’d like you to take a moment to sit down and really think what life would be like for your family if you were no longer around. Where would the money come from to cover the mortgage, school fees, running the car, credit cards and everyday living expenses such as food, clothing, phone bills, gas, electricity and child care not to mention funeral expenses and other medical expenses that your health fund simply may not cover?
You may have money in a savings plan or investments or perhaps equity in your home but turning these into cash would mean your family has to sell assets which may cause even more disruption and emotional trauma at a time when they really need financial support and time to adjust.
Whilst the above issues are hard to deal with, unfortunately it happens to Australian families every day. To give you and your family peace of mind, we encourage you to take the first step and make an appointment to discuss your family’s life insurance requirements today.
Life Insurance provides a lump sum on the event of death or upon diagnosis of a terminal illness.
There are many situations and scenarios where life insurance is very important to have in place. For example, you may have a home, partner and young children as well as a successful business. In the event of your premature death, have you considered how your family will cope with:
- Clear your mortgage, car loan, credit cards and any business debts?
- Providing an income so they can maintain their current lifestyle and pay bills?
- Set aside an amount to educate your children?
- Honour your bequests to others such as parents and charities?
Many people falsely believe the life insurance in their Superannuation Fund is adequate. While this type of insurance is cost effective, it very often leaves loved ones well short of what is really required to maintain the family financially.
Term Life pays a lump sum upon the death of the life insured should death occur during the term of the policy. This provides protection for your loved ones. In the event of the persons death the lump sum will assist in paying off any outstanding debts such as a mortgage. The sum insured should be greater than your debts to assist your family especially if you have children.
Some policies provide extra benefits, such as terminal illness benefit, whereby if you are diagnosed with a terminal illness, the amount insured is paid out upon diagnosis.
The cost of Term Life cover increases as you get older, however the older and more established your financial position is, the less insurance you are likely to need. Therefore it is possible to reduce your insurance cover over time to minimise cost but maintain protection for yourself and your loved ones.
Our modern day lifestyles and the pressures we face on a daily basis may contribute to serious illnesses.
Unfortunately, we regularly hear about someone who has suddenly been diagnosed with cancer, a serious medical condition, suffered a heart attack or other traumatic medical illnesses.
Importantly, statistics are now showing that we are more likely to suffer a traumatic medical event and survive than die. It therefore makes sense to considered trauma insurance as part of your personal insurance package.
If you were diagnosed with cancer or suffered a heart attack, it could be emotionally and financially traumatic.
However financially it would be a great relief to receive a lump sum payment shortly after diagnosis to assist in your treatment and provide you with funds to consider; your working future, take an extended holiday, pay off debts, funds to consider alternative treatments, find the best Doctors and concentrate on recovery.
Statistics show us that on average 1 in 4 women and 1 in 3 men will suffer from a cancer during their lifetime (source: Cancer in NSW, 1998.) And that cardiovascular disease was the leading cause of death among Australians in 1998, accounting for 40% of deaths (source: Australian Heart Foundation, 2001)
Modern medical advancements have resulted in higher life expectancy for both males and females and much higher chances of having successful treatment of major traumatic medical events and surviving.
How does trauma insurance work?
Trauma Insurance is a living benefit that pays out a lump sum amount on the diagnosis of a traumatic condition. Major traumatic conditions include; Cancer, Stroke, Heart Attacks and Open Heart Surgery and also less common conditions such as Paraplegia, Quadriplegia, Blindness, Parkinson’s Disease, Multiple Sclerosis & Major Burns.
Trauma insurance assists you at a time when you require the money the most. A lump sum payment after a traumatic event would enable you to:
- Clear debts (personal and business)
- Assist with medical expenses for specialist advice within Australia or overseas
- Make alterations to cars and home if necessary
- Remove the financial stress which will assist with recuperation
Trauma policies pay a lump sum in the event of an injury or sickness as defined in the policy document and can be taken as a stand-alone policy, or attached to a life insurance policy. There are basic trauma policies and also extended trauma policies that cover a greater level of medical events (we will explain all options available to you).
Some of the specific medical conditions covered by trauma insurance include; aplastic anaemia, liver disease, cancer, dementia, chronic lung disease, stroke, paralysis, major head trauma, multiple sclerosis, major organ transplant, parkinson’s disease, deafness, severe burns, heart attack, loss of speech, heart surgery ,blindness, kidney failure, loss of limb/eye and occupationally acquired HIV.
(Please note: this is a guide only please see life insurance company PDS for full list of medical conditions covered.)
Trauma insurance is another component for an overall risk protection plan.
Total and Permanent Disablement Cover (TPD)
TPD insurance provides a lump sum payment in the event of you becoming totally and permanently disabled. How would you cope financially if you were totally and permanently disabled today?
TPD cover offers you protection and financial peace of mind knowing that if you were to ever become totally and permanently disabled and unlikely to ever work again, you would receive a lump sum of money (the amount insured) enabling you do such things as:
- Clear all your debts (mortgage, credit cards, etc.)
- Make alterations to the family home including such things as; build a ramp instead of stairs, new bathroom and widen doors if wheelchair bound.
- Have future funds for ongoing medical expenses and nursing care.
- Create an annuity income to meet everyday lifestyle expenses and commitments
TPD can be taken as a stand-alone policy, but more commonly it is taken as an option along with term life insurance. We will discuss the various options with you and recommend the best structure depending on your needs.
Please contact our office for more information on personal insurances or alternatively we can arrange for a confidential discussion. Select Advice Financial Planning will work closely with you to understand your needs and tailor an appropriate personal insurances package.