96% of Australian families lack enough insurance to protect their families for even 10 years. Take a look at the facts:
- Heart disease kills one Australian every 12 minutes.
- 45,000 Australians are expected to die from cancer this year alone.
- Someone in their mid-30s with two young children and earning around $75,000 pa will need life insurance cover of at least $750,000–$975,000, or 10–13 times their annual pre-tax income.
What type of insurance do you need?
Income protection, life insurance, trauma cover and Total & Permanent Disability (TPD) are fundamental to any good financial plan. Here’s what you need:
- Life insurance: This pays your beneficiaries a lump sum when you die.
- Total and Permanent Disability (TPD): This pays you a lump sum if you are unlikely to work again due to a total and permanent disability.
- Trauma cover: This pays you a lump sum if you suffer a specified and serious illness, such as a heart condition or cancer.
- Income protection: This replaces around 75% of your income if you are sick or injured and can’t work.
When do you need to review your policies?
- When there have been changes to your lifestyle or health
If you have given up smoking (generally for a period of 12 months or more) you may wish to advise your insurer as your premium should revert to the lower non-smoker rates. Other positive changes to your health including weight loss may also lower your insurance premiums.
If your health has deteriorated since you first took out your insurance it may be difficult to obtain increases or make changes to the provider or type of insurance, with changes generally requiring you to undergo medical underwriting. Therefore, if you are considering making changes to your insurances it is very important that you do not cancel existing policies until new applications have been accepted by the insurer and are in force.
- When your family situation changes
Major changes to your circumstances such as marriage, divorce, loss of a loved one, or the birth of a child will generally necessitate a review of your insurance needs. In the event of divorce or the loss of a loved one, you may wish to review the level of cover and the beneficiary nomination for your policies.
- When your debt levels change
The purchase or sale of assets and an increase or decrease in borrowings generally signals time for a review of your levels of cover as sums insured often take into account your level of liabilities that would need to be repaid (if no assets are sold) in the event of death, disability, illness or injury.
- When it’s been a while since you reviewed your policies
Insurance companies often review and upgrade their policies to provide better coverage to policyholders and to remain competitive within the industry. Insurance companies may change policy definitions or offer cover under broader definitions which can make it easier to claim. But these improvements are not always automatically passed on to all existing policy holders. It can pay to check whether the policy has a ‘guaranteed upgrade’ clause, which states that future improvements to the policy will also apply to exiting policy holders.
If you’re not already covered, stop procrastinating. As they say… it’s better to be five years too early than five minutes too late!
If you’d like some advice on whether you have the right level of cover for you & your family, email us or call us on 9887 8751.