Insurance is about protecting what is important to you. Having the right insurance cover ensures that your family be provided for should something happen to you. There are four types of personal insurance that you should consider:
- Life insurance
- Total and permanent disablement (TPD)
- Trauma insurance
- Income protection
Life Insurance provides insurance cover that pays a lump sum benefit to your Estate if you die during the period of cover. If you are the main income earner in the family, life insurance can help provide a stable financial future for your loved ones if you pass away prematurely. It can help pay for major expenses, such as the mortgage, education costs and funeral expenses.
How much cover do I need?
It is common to review your life insurance when significant change occurs, such as:
- getting married
- getting divorced
- buying a house
- starting a new job
- the birth of children
- establishing a business
Agility Wealth Partners can advise you in all situations. We will assist you to determine the amount of cover you require, arrange quotes from reputable life insurance companies and advise on matters like whether you should take a joint policy with your partner.
Total & Permanent Disability
Total and Permanent Disability (TPD) cover is life insurance that pays out if an insured person becomes Totally and Permanently Disabled. In the event of a claim, the TPD payment can be used to eliminate debt, pay ongoing medical expenses, make necessary home modifications, or hire home care services such as nursing, cleaning and cooking.
It is usually purchased as an additional option on another policy but can be purchased on a ‘stand alone‘ basis. We can advise you on the appropriateness of this cover.
Trauma insurance pays a lump sum in the event that you suffer a major injury or illness such as heart attack, stroke or cancer. This type of cover is designed to help you cover medical expenses associated with the trauma and other costs that your family may be exposed to. It is often be combined with Life and/or TPD cover at a discounted price.
Trauma insurance fills in the gap between life insurance, TPD insurance and income protection insurance. For example, an insured person who suffers a mild stroke and is able to return to work after three months would not be able to claim under their life insurance or TPD and may not be able to claim under their income protection policy.
We can help you determine which insurance is best for you.
Income Protection insurance is probably the most essential type of insurance cover because your income determines your standard of living, your ability to build wealth and your capacity to provide for retirement.
It provides you with an income should you become unable to work due to an injury or sickness. Benefits are paid monthly. The amount of cover is usually restricted to 75% of your gross salary. Premiums are tax deductible for most taxpayers and the income is assessable because it replaces lost ‘assessable‘ income.
The choice of cover depends entirely on your individual circumstances. However, because of the number of choices, advice from a professional adviser is essential.
- Benefit periods can vary from 2 years to age 65 or life for accident cover
- Waiting periods (the time before a claim is paid) can range from 14, 30 or 90 days to even longer
- Maximum benefit calculations for self-employed people can be complex
- Claims benefits can be escalated in line with inflation
- Your occupation determines your premium and some companies exclude some occupations altogether
- Policy definitions can vary greatly between companies especially the definitions of “total disability” and the differences between ‘own occupation’ and ‘any occupation’ and ‘Indemnity’ vs ‘Agreed Value’
- Premiums can be ‘Stepped‘ or ‘Level’