Ask An Adviser - What Are The Essential Insurances for Young Australian Families? (1)

Top answer provided by:

Lucky Manna

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Hi Kain,

Personal insurance is underrated. When you have a young family, planning and protecting your family in case things go wrong is crucial, as is knowing the steps to take if you need to make a claim.

As a mum of a 12-year-old myself, my husband and I work hard to build a financially secure future for our family. This includes ensuring our lives and livelihood are protected. Given life is unpredictable, having the right insurance provides us peace of mind,.

When it comes to protecting yourself and your loved ones, here are some types of insurance I highly recommend considering. Please note, this is general advice and may not perfectly fit your unique financial situation. 

Life Insurance- Paid to your beneficiaries(nominated) in the event of your death.

Why is it important:

• Debt repayment: Pay off any loans.
• Future expenses: Education and healthcare of dependents.
• Income replacement: maintain your family’s standard of living.

Things to consider:

• Types of insurance contracts: some cover decrease based on age, salary, and years to retirement.
• Pre-existing insurance: most superannuation insurance is assessed at claim, meaning any pre-existing conditions could affect the payout.

Total and Permanent Disability (TPD) Insurance -lump sum payment if you become permanently disabled.

Why is it important:

• Income replacement: pay off or reduce your mortgage and replace lost income.
• Medical costs and home modification: medical expenses, your rehabilitation and home modifications need to be considered.

Things to consider:

• Guaranteed renewable: your insurance renews if you pay your premiums, regardless of changes in health, occupation, or hobbies. However, trustee or employer superfunds can change or revoke group policy terms at any time.

Income Protection (IP)/ Salary continuance Insurance (SCI) cover –pays a monthly benefit if you are unable to work due to illness or injury.

Why is it important:

• Regular income replaces your pay when you can’t work so you can meet financial obligations.
• Living expenses cover day-to-day expenses and bills.

Things to consider:

• Inactive accounts: Inactive accounts may lead to insurance cancellation within super policies due to Protecting Your Super legislation.
• Change employment: if you change employers or occupations, it’s important to check whether you can retain your insurance, especially if it’s part of your employer’s super fund.
• Guaranteed renewable: consider whether your insurance remains guaranteed renewable if you change occupations or become self-employed. 

Trauma Insurance -Payout on diagnoses of an illness like cancer, heart attack, stroke, or other listed conditions.

Why it’s important:

• Medical treatments: Treatments not covered by Medicare.
• Recovery support: financial support to reduce financial stress.

Some steps to consider:

1. Understand your insurance goals: what are you wanting to protect, what are you willing to sacrifice?
2. Needs, beneficiary, and payment options:  A financial planner will take the time to understand your needs and goals. They will then provide advice on structuring insurance, maximising tax benefits, and optimising your cash flow.

3. Assistance with the claims process: Claims can be a stressful on the entire family having a financial planner guide you can significantly speed up the process.

I highly recommend seeking a Financial Adviser for your personal insurance recommendation.

While the Adviser Ratings Website facilitates the question and answer functionality, all such communications are between users and authorised financial advisers, of which Adviser Ratings has no affiliation. Adviser Ratings is not the advice provider and does not provide financial product advice and only provides information that is general in nature.

Article by:

Lucky Manna

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