Making the Most of Insurance

March 8th, 2013
Whether it's for your car, your health or your life, the right insurance can make a lot of difference when something unexpected comes your way. While most Australians insure their home and contents, ma ny are uninsured on other fronts. Read on to take a look at some of the types of insurance you may wish to consider.
Life Insurance

While it's not pleasant to dwell on, having the appropriate life insurance is integral to ensuring the well being of your family in the instance your life was cut short. Without your support, your family may not be able to keep up with living expenses and repayments.

Most insurers will provide a policy with a lump sum payment of up to two million dollars, with premiums depending on your age, health and lifestyle.

When calculating the lump sum payout, you will need to consider any mortgages, ongoing financial commitments as well as the cost of living. Depending on your stage of life this will vary. It's also important to keep in mind that as your life circumstances change you may need to update or increase your life insurance.

Some policies will require an extra premium to be paid in case of accidental death, while others will include this in their policy.

Income Protection or Disability Insurance

In the instance you are unable to work because of an accident, illness or other condition, income protection insurance will pay you a regular wage until you are able to return to work.

If you cannot return, this insurance will pay you 75 per cent of your income until age 65, or a previously agreed upon monthly wage. Checking your income protection insurance benefits regularly is advised if you have opted for an agreed upon amount, as it may not increase with your earnings.

Always read the fine print with these types of policies. In particular, look to the definition of disability. While you may not be able to work your current field of employment, some insurers may not consider this to fulfill their definition of disability.

Trauma Insurance

Also known as crisis cover, trauma insurance will pay a lump sum in the instance you are diagnosed with a specified illness or condition, for instance stroke, heart attack or cancer. Many overlook this type of cover, relying on income protection instead, however most income protection doesn't take effect until three months after the illness or event.

Trauma insurance can allow you to take time off work, pay for treatments or perhaps even work part-time until retirement. While perhaps not as essential as other forms of insurance, it can offer additional peace of mind.

Again, the fine print is important. Look beyond the list of ailments covered by these types of policies and to their specific definitions of these conditions. A policy that seems to cover a wide range of illnesses can actually have very narrow definitions of what constitutes these conditions.

Some insurers also offer children's insurance; a lump sum payment in the instance a dependent child is diagnosed with an illness. This is intended to cover medical expenses, or allow parents time off work.

The first step to ensuring you have the right insurance is to look at your current debt as well as your ongoing cost of living. A conversation with your broker is a good place to start.