personal insurance

The common belief “it won’t happen to me” often results in many people having a sound plan for wealth creation but not an adequate plan to protect the very thing that generates the wealth—themselves!

How death, disability or illness affects your ability (or your family’s ability) to realise your lifestyle goals and objectives depends on the wealth protection strategy you have in place.

By taking out insurance, you can provide some financial protection for your family’s personal needs. Insurance can be structured to provide for such things as the repayment of your debts upon death or disability, financial assistance for dependants and protection against the loss of income.

Questions to ask yourself about personal insurance

What is income protection insurance? – Also known as salary continuance, income protection is designed to provide a regular income in the event you are unable to work due to sickness or injury.

How much and for how long does income protection insurance cover me? - Generally, income protection insurance provides a regular income during a period of disablement for up to a pre-determined and agreed benefit period. Generally, the benefit amount payable is up to 75% of your income.

What should I consider when taking out income protection insurance? - Income protection insurance is increasingly important when borrowing as it can help meet loan repayments if you are unable to work due to illness or injury.

Income protection insurance - Important Fact - You should ensure your insurance cover is adequate for your needs. Under-insurance could result in serious financial difficulty.

What is life insurance? – Insuring yourself for a particular amount in the unfortunate event you die, the insurer pays that amount; often used for the repayment of debts, the covering of future needs (for example, the cost of children’s education or long-term care) and providing funds for investment to generate an income or to keep your business afloat.

What is Total and Permanent Disability (TPD) Insurance? – Insurance that provides a lump sum payment should you suffer and illness or injury which totally and permanently prevents you from working again.

Own occupation (when referring to TPD) means? -  The insured must show they have a total and permanent disability that prevents them from working in their own occupation which they disclosed when applying for this cover. Own occupation cover is often more expensive, and may only be available to individuals who have clean medical history and work in a relatively risk-free occupation, and

Any occupation (when referring to TPD) means - The insured must show they are totally and permanently disabled and unable to work in their usual, or any other occupation for which they are reasonably suited by their education, training or experience. It is often the cheaper option however it can be more difficult to meet the requirements of this type of disability definition.

Homemaker (when referring to TPD) means - Payment of benefits is based on the proviso the insured, through sickness or injury, is unable to do any normal physical domestic duties and will never be able to do so again.

Do disability payouts incur tax consequences?  - There may be taxation consequences where a disability lump sum superannuation payout is made.

What is critical illness insurance? - Also known as trauma insurance, critical illness insurance provides a lump sum benefit in the event the life insured suffers a “critical condition” as defined by the insurance provider. Critical illness cover is designed to help you financially recover from a trauma or crisis, such as a heart attack, stroke, cancer or other life threatening conditions.

Article originally appeared at

Any advice given is of a general nature only and does not take into consideration your personal circumstances. Please consider the appropriateness of the advice before acting.

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