BACK to BASICS: Why do I need insurance?

“It won’t happen to me”.  And if you are lucky, it might not.  But many of us will have our lives interrupted by an accident, illness or death.  So, if you are not one of the lucky ones, wouldn’t you prefer to be one of the smart ones with insurance to help you and your family with the tough times?

Taking out a contingency plan (and maintaining it) enables you and your loved ones to negotiate through life’s curveballs.  The great thing about having a plan in place is that if you are unable to work, have an accident, or die prematurely, that plan can help you or your family by removing the financial burden that these events can cause.

33% of women and 25% of all men will suffer cancer at some stage in their lifetime.

Protection typically offers four solutions to preserve the way of life you and your family live:

first table

Questions to ask yourself

No-one likes to think about worst case scenarios.  But if something does happen to you, could your spouse afford home and car loan repayments, credit card and household bills and the cost of raising children?  If you were ill, could you afford to take time off to heal?  Additional bills for hospital stays, medication and other medical services can all add up.  Not all expenses are covered by Medicare and private health funds.  The more debt you have, the more reason for you to have adequate insurance cover.

Don’t I already have cover?

Many people enjoy the benefit of insurance cover through their employer’s superannuation fund and employers may offer some as part of your overall package.  However, this type of insurance may not be sufficient for you and your family.

The average Australian mortgage is $300,500. 
The average insured amount in super funds is just $183,900.

Workers compensation and Private Health care do provide limited compensation if you are injured at work, or in need of health care.  But unfortunately, they are restricted and probably won’t be enough to maintain your currently lifestyle:

  • Workers Compensation is not available to self-employed people
  • It doesn’t cover non-work-related illness
  • More than 50%* of all serious accidents happen away from work
  • The maximum Disability Support Pension per week is $404.15 for singles and $609.60 for couples*

Putting an insurance protection plan in place

If you are considering putting an insurance protection plan in place, the most important thing is to talk to your financial adviser to ensure your needs are fully met, and read the PDS of your recommended product thoroughly.

If you already have insurance in place but don’t think it meets your needs, your financial adviser can compare other insurance providers for you.  There are a huge range of things to look at when comparing insurance policies (see list) so it is helpful to have some guidance.

Although cost is always a concern, be careful not to make a decision based solely on money.  If you are going to part with your hard-earned cash, you want to make sure the insurance plan meets all your needs.

Most importantly, if you do change your insurance provider, only cancel your existing insurance when the replacement cover is in place.  That will ensure you avoid having a period of no cover.

Whether you are applying for insurance protection for the first time, or changing your insurance coverage, there is lots to consider.  It is helpful to have an experience financial adviser to guide you when navigating the various providers and policies available.   We are big believers in insurance protection at Fortress, because we have seen how it positively impacts our clients lives.

To set up or review your insurance protection plan with Fortress Financial Solutions, please call our office on 07 4646 4970, email us at info@fortressfs.com.au or book your consultation online.

 

Written by Emma Linton Doig, Practice Officer at Fortress Financial Solutions

 

*Australian Bureau of Statistics National Health Survey – Summary of Results, Australia – 4364.0, 2004-2005
*www.centrelink.gov.au, 03 July 2017
All images courtesy of CommInsure.

Information on this site may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product.

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