Have you ever stopped to think what would happen if your family’s income stopped due to someone dying, getting sick or having an accident?
The loss of wages might be manageable for retirees or people later in their working lives who have brought up their kids, paid down their debts and built up their super and passive assets. For families with younger kids, bigger debts and lower super balances, it may well be disastrous. Centrelink benefits don’t cover home loan payments and hungry mouths to feed, let alone building for eventual retirement. You may have some basic cover in your super, but have you ever sat down and worked out if it is enough or even too much?
There are solutions to the problem in Personal Insurances. These are separate to Health Insurance which covers medical costs; these provide money to the family to keep going. There are two main types of Personal Insurances: Lump Sum Cover and Income Protection.
Lump sum Cover provides a large lump sum of money to sort out your finances in the event of something major happening. You can insure for a payout in the event of Death, Total & Permanent Disability (TPD) and Major Medical Trauma, things like cancer, heart attack and stroke. You need to work out how much is required to keep a roof over the family’s head and provide for ongoing income to get through in the event of each of these things happening to either partner. The amount required is always different as it is based on your personal situation regarding debts, existing super balances and family situation. You need to consider covering not just the working parent but also any non-working parents as if something major happens, the worker may need to come home or change their job.
Income Protection provides an ongoing monthly income in the event of being off work due to sickness or accident. The variables are how much you will be paid per month, how long you have to be off work to start getting paid and how long you will be paid for if off work for an extended period. Considerations are how much sick leave and cash reserves you have and if you have TPD cover.
The key with personal insurances is to know where you stand. What cover do you have now, and do you need to top it up or reduce to save premium and know how things will pan out. Like all insurance, you hope you’ll never need to claim, but you sleep better knowing you have some cover in place, especially at that stage of life where you have lots of financial commitments.
If you think you could benefit from a discussion with a Financial Planner, give us a call on 49467359 of visit www.eclipsefp.com.au. There’s no obligation, the first meeting is free and all fees are spelled out clearly in advance.
