There are many products and types of insurances as well tax implications, particularly in light of legislative changes in the payment of benefits from super plans and group plans. To properly ascertain if you are adequately insured you should contact Tiffen Insurance Services for an assessment of your personal circumstances.
Personal insurance provides protection against sickness, injury and death, and includes:
- Life insurance
- Total and Permanent Disability (TPD) insurance
- Trauma insurance, and
- Income protection
While the insurance doesn’t remove the risk of something going wrong, it provides you and your family with protection and financial security if something does happen.
An overview of difference insurances
Life insurance can provide financial protection for your dependants if you die. The cost depends on the type of cover you choose. You should review your cover regularly to ensure you are not under- or over-insured. The most appropriate policy is one that strikes a balance between how much premium you can afford to pay and favourable policy conditions. Life insurance can be used to repay debts, cover your dependants for the loss of your income and/or secure your business.
Total and Permanent Disability (TPD)
TPD insurance pays a lump sum if you can’t ever work again because of illness or injury. TPD can be used to repay your debts, cover medical expenses, capital gains tax liabilities and cover your dependants for the loss of your income.
The precise definition of TPD and the conditions that must be met to receive compensation vary considerably, depending how your cover has been structured. So it’s important you understand the conditions applicable to you before taking out TPD cover.
An income protection policy can generally pay you up to 75% of your monthly income if you can’t work due to illness or injury until you are able to return to work or your 65th birthday. Income Protection is a highly tailored cover with numerous options and can be structured many ways to suit your needs. If you own the cover personally the premiums are generally 100% tax deductible.
Trauma insurance pays a lump sum if you suffer a specified traumatic event such as the diagnosis of cancer or coronary disease.
The benefit is paid when diagnosis is confirmed, not when you die of the condition. This is important because it means you and your family have a lump sum you can use at your discretion, when you most need it. You could use it to pay for additional medical care, or to pay off the mortgage to relieve the financial pressure on your family.
Things you should consider
You need to be sure you aren’t over-insured – or worse still, under-insured. The type and amount of risk insurance you may need depends on a number of factors such as:
- Your personal financial circumstances and objectives
- Your lifestyle needs
- How many dependants you have
- Your age.
As your wealth grows and personal circumstances change, your need for insurance cover may also change, so it’s important to review your insurance cover regularly. Your financial adviser can help you assess your insurance needs as part of your overall financial plan.
Why have risk insurance?
It’s not something anyone likes to think about. But life’s uncertain. You might not always have the luxury of the income you currently have. You could fall sick or have an accident. But when that happens, you don’t have to eat into the wealth you’ve worked hard to create.
That’s why a sound financial plan will help you create wealth and preserve it. Your financial adviser can help you structure your financial plan so that if you’re not able to work, you can still maintain your standard of living and keep your investments. Your financial plan is all about helping you keep control of your wealth, so you can make the most of it when you retire. It should also ensure your family is taken care of when you are no longer around to take care of them. Ultimately, your financial plan is about providing you and your family with peace of mind.
Risk insurance shifts the financial burden created by personal risks to insurers who can afford to cover them by pooling the premiums paid by their customers. It provides peace of mind that you and your family are financially secure. Risk insurance may pay an ongoing income or lump sum if you can’t work because you’re temporarily or permanently disabled, or if you die. Different insurance for different needs.