I often wonder ‘will my Insurance payout when I need it?’

‘Life is full of risks – but some unexpected events can really set us back.’

Therefore it makes sense to protect the things that matter most.

As our lifestyle changes, our financial circumstances and insurance needs also change.

Perhaps we’ll upgrade our car or house, take out an investment loan or start a business.

If we take out insurance, the cost of repairs, medical treatments, travel changes or theft can be softened. When something goes wrong, we expect an insurer to deal with the disaster — even provide a cash settlement. Of course, such an outcome depends on the terms of the policy.

So are all insurances equal?

We’ve heard the horror tales about insurance payouts. Will providers pay out when we need it most?

The simple answer is some will and some won’t. So it is really important to pay attention to the wording about the very items you want your policy to protect.

One the smartest steps when taking out insurance is to ensure it has all the ‘risk’ features you really need. If a policy sounds too good to be true, or too easy — for example there’s no medical or questions being asked upfront — then it’s going to take a lot longer to access a payout.

Using a broker or financial adviser can guide you towards insurance that best suits your needs. Especially if you have a specific issue like ongoing medical treatment, or you participate in extreme sports, because different insurers have varied views on what they will and won’t cover.

If you have an existing medical condition, the approach is always disclose all, whilst some conditions can affect cover and or the price, many have minimal impact. Full disclosure will mean you can get cover appropriate to your needs, and maximize the chance of a payout when you need it most.

All insurers are different and some will provide cover when others will decline the same client.

To get the right policy upfront requires research, and a good broker can mitigate a lot of problems just by knowing where to start. After all, it is their job.

But will my insurance payout when I need it?

If you want to reduce risk to you or your assets, consider this insurance list:

1. Life insurance
2. Trauma
3. Income Protection
4. Total and permanent disability

There’s a lot of things to protect. So it helps if you understand how much it costs to maintain your lifestyle because if the unimaginable happened, could you cope financially? Luckily, many risks can be bundled under one premium.

Therefore, putting an insurance plan in place is an important step towards safeguarding you or your family’s livelihood. And the most that could set you back is the cost of a monthly or annual premium. If you’ve taken a policy from a major, trustworthy insurer, then wondering if my insurance will payout becomes less of an issue.

If you’re unsure about insurance or have complex requirements, you’ll benefit from speaking with an expert who understands the different products on the market.

ASIC publish a really great guide about how life insurance works too.

If you’d like to chat about finance, please contact us.

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Personal Insurance, also known as Risk Insurance, is an essential part of any wealth creation strategy.

‘It pays to protect wealth creation plans because life is full of unforeseen circumstances that can derail your livelihood.’

What personal insurance types are available?

There are different types of cover so depending on your circumstances, you may need one or more. A financial adviser can provide advice on life or disability insurance, income protection and trauma/crisis insurance. For example:

Life cover

Your family or business associates can use a lump sum which is paid upon your passing. Your beneficiaries can use a lump sum at their discretion. You can also use the lump sum to assist with medical costs, funeral expenses or to repay debts too. There are a number of optional benefits within Life cover. These allow you to apply for more features. These features cover things such as school fees, future expenses, or can be used assist to employ skilled staff.

Total and Permanent Disablement (TPD)

It provides a lump sum in the event of a permanent disability that prevents the insured from returning to work. It is a form of personal insurance. TPD is typically bundled together with a life cover policy. You can use TPD to provide for dependants or to compensate for the loss of income. You can also use it to repay debts or cover medical costs. In addition, you can also use it to fund lifestyle adjustments such as wheelchairs, ramps and manual car controls.

Trauma insurance (crisis recovery)

Trauma insurance provides cover for specified illnesses or injury. Inclusions often include major illnesses or injuries that will make a significant impact on a person’s life. For example, cancer or a stroke. Trauma cover is often paid as a lump sum. You can use the funds from a Trauma policy at the beneficiaries’ discretion. For example, to pay for additional medical care, or to pay off the mortgage and relieve financial pressure. More importantly, rehabilitation, carer or day-to-day living costs are also covered by a Trauma policy.

Income protection

Income protection is another type of personal or risk insurance. It is an important consideration for anyone who relies on a salary. Because it replaces the income lost through your inability to work due to injury or sickness. It is especially suitable for the self-employed, small business owners or professionals. As these often include people whose business relies heavily on their ability to work. Income protection usually provides a monthly benefit of up to 75 per cent of your salary. This is usually for an agreed time period. Even when the owner can no longer run the business, business continuity can be catered for. Premiums paid for this type of policy are generally tax-deductible. You may also be able to pay for this type of insurance through superannuation.

Personal Insurance Considerations

It pays to do your research online. As with any type of insurance, it is important to seek independent financial advice. You should always seek it from an appropriately licensed and qualified financial adviser.

If you’d like to chat about finance, please contact us.

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