By Mark Grasso
Personal insurances are policies we hope to never use, but are eternally grateful for if we do have to. Having adequate life insurance cover provides you with the peace of mind that you and your family will be protected financially in the event of unexpected death, illness or injury. Obviously no one wants to see their loved one go through one of these things, but ensuring you have the funds to cover bills and day-to-day expenses takes just one part of the pressure away.
There are 4 types of personal insurance, each with their own purpose and eligibility criteria:
INCOME PROTECTION
Income protection insurance pays you a portion of your monthly salary if you are unable to temporarily work due to injury, accident or illness.
This cover is extremely important if you do not have the required cash buffer available to cover your expenses if you were unable to work.
LIFE COVER
Life cover, or death cover, pays your estate a lump sum in the event of your death. It can help repay any debt you may have had and help your beneficiaries.
TOTAL AND PERMANENT DISABILITY (TPD)
Total and permanent disability insurance pays you a lump sum when a doctor signs off that it is likely you will be able to return to work again because of an illness or injury.
Most people think this is something like losing a limb in a car crash, but the most common claim in the industry at the moment relates to not being able to work due to mental health reasons. We saw a rise of this during COVID-19 when people were separated from friends and family.
TRAUMA
Trauma insurance pays a lump sum when you suffer from an illness or injury that is deemed a traumatic event. This could include a heart attack, cancer, stroke or even severe burns. Depending on the wording of your policy we have also seen clients be able to claim from having a melanoma removed that did not lead to a cancerous event.
Life, TPD and Income Protection insurance are all available through your superannuation fund and the premiums can also be funded by your superannuation balance.
Trauma insurance is the only insurance that is not available within superannuation and is usually the cover that is most likely to be claimed on.
CHILD TRAUMA
Child trauma insurance pays a lump sum in the event any of your children pass away or suffers a critical injury or illness.
I have never had a client turn this down once it is explained to them and it is just as important, if not more, than the above types. If a child is unwell or hurt, they don’t just want their guardian, they need them there to make important decisions. It means you will be able to take the time off work to support your child without worrying about the bills.
It is also important that both partners in a marriage look at personal insurances, not just the breadwinner in the family. People often say to me one person in a couple is insured for $1 million, and the other $100 thousand. What happens if something happens to the person insured for $100 thousand, leaving the breadwinner vulnerable and trying to look after children? What if they have to reduce their hours, and can’t afford their mortgage?
Here at Diamond Partners we do the leg work to make the process of obtaining personal insurances easier. We work with you to help determine what type of insurance you need and the sum insured. We then assist you in obtaining the best possible cover for your circumstances.
We know it can be overwhelming to receive a lump sum payment in your bank account, whilst also ensuring it lasts long term to cover living expenses. We provide all of our clients with advice to ensure the strategy in place works for you and your goals.
Be strategically prepared, contact us today.