Our Financial Advice Professional, Chris Stevens from GC Accountants has put together his “Top 10” reasons for re-thinking your personal insurance cover.
1. Challenges in life
While most people avoid thinking about suffering serious illness or accidents, they affect roughly 1 in 5 Australian families who will lose half or more of their income as a result. As the experts say, the best treatment is always prevention.
2. Cost of living
Families with large mortgages or regular financial commitments are probably most at risk and with the cost of living on the increase and jobs becoming more uncertain, it makes even more sense to review the types of cover on offer and talk to a financial adviser about what you need.
3. Family first
Unlike the title suggests personal cover is less about you and more about your family. What would they do if you got seriously ill or had a bad accident? Making sure you have enough income to cover the unexpected can mean the difference between maintaining your family lifestyle and losing your home.
Of the four main types of personal cover – income protection is usually the most expensive with TPD the cheapest. However income protection premiums are also generally tax deductible. Keep in mind your need for different types of insurance will change as you move through life, so this will also dictate how much you need to pay in premiums each year. You can also reduce the amount of your premium by adjusting the benefit payable, the waiting period and how long benefits will be paid for.
5. Insurance in super
Default options for life and TPD cover are also offered in super, which means you can pay your premiums out of your super balance rather than your pay packet, giving you affordable coverage to ensure your family is secure – should something unexpected happen to you.
6. Just getting by
The Government’s disability support pension will provide you with a modest level of income but will make it very difficult to maintain the lifestyle you currently enjoy. Worker’s compensation only covers work-related illness and with more than 50% of serious accidents occurring away from work – your chances of a successful claim are limited.
7. Good advice
Follow the experts – some form of personal insurance is a staple in every financial plan as part of a comprehensive wealth protection strategy. Getting professional advice also means you do less work – advisers can help size up your insurance choices, cut through the policy jargon plus assist with any medicals and generally streamline the application process.
8. Now or never
The best time to take out personal cover is often when you are young and at least risk of a serious illness. Premiums are calculated using a range of factors including: health, age, gender, smoking status and occupation. If you wait until you are older you could begin to suffer health issues, making you ineligible for cover or subject to higher premiums – so your insurance becomes less affordable when you need it most.
9. Out of pocket
Private health insurance cover, while helping with hospital expenses and medical treatments does not necessarily cover things such as your out-of-pocket expenses or rehabilitation costs. Most importantly, it does not provide you with an income to cover the mortgage, school fees and other costs of living.
10. Peace of mind
Once you take out personal insurance that suits your needs and situation you can finally relax. It will provide you peace of mind knowing that your family will be safe and financially secure during the emotional ups and downs.
Chris Stevens recommends you talk to a financial adviser about the ideas outlined or any other questions you may have about personal cover as they are in the best position to provide advice based on your individual objectives, financial situation and needs.
Call: (02) 4956 1640
Chris Stevens, Partner of GC Accountants Pty Limited, is an authorised representative of Count Financial Limited ABN 19 001 974 625, AFSL 227232. His advice is general in nature. It does not take into account your financial circumstances and objectives. You should consider talking to a financial adviser before making a financial decision.
‘Count’ and Count Wealth Accountants® are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count advisers are authorised representatives of Count. www.count.com.au