Are You Covered?
Have you got enough insurance if something goes wrong? How much cover is enough? The amount of cover you need is different for every person. It is important that you speak to an expert on this matter as many underestimate the amounts that they need, or don’t fully understand the different types of insurance available.
I am an international pilot as well as a financial adviser. In these two roles, I have a unique perspective on risk. Almost anyone can fly a plane straight and level. Professional pilots are trained for when things go wrong. It is when things go wrong that you want an expert at the helm. In a similar manner, financial advisers are trained to prepare for things that could go wrong in your life.
What Do You Need Insurance For?
If you lose your ability to generate income through sickness, accident or death, you will likely need:
1. Enough to cover your debts.
2. Cover for future income needs of your family.
3. Cover for future lump sum expenses (such as education, renovations for disability or medical expenses).
What Type of Insurance Do You Need?
There are a few different types of insurance.
1. Trauma (or Critical Illness), which pays you a tax-free lump sum in the event of sickness or injury.
2. Total and Permanent Disability, which covers a lump sum in the case of being permanently disabled.
3. Life (or Death cover), which covers your loved ones in the event of your death.
4. Income Protection, which covers potentially your largest asset, your future working income.
5. Business Expenses Insurance.
Australia has one of the highest household debt ratios in the world. This is potentially problematic for our economy in more than one way. The higher the debts, the higher the insurance needed to cover those debts, yet Australia has lower insurance levels than many.
Insurance can be expensive, although being underinsured can put your family in a far worse position if something goes wrong. Don’t forget you can use your superannuation to pay for a number of your insurances.
Many are prepared to spend more money insuring their car than their life or income. Insurance is an investment in the security of your family. It protects you against the ‘what ifs’! Are you appropriately covered?
Rob Shears is an Authorised Representative of Valor Financial Group (AFSL 405452). This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances.