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What is Personal Insurance?

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.