Good financial planning is about wealth creation and wealth preservation.  Wealth preservation (insurance) helps protect your ability to create wealth.  We all expect to stay healthy and live to a certain age.  However, the unexpected does occur and may impact on your financial goals.

Below is some general information on the main types of personal insurances, however for more detail on how Hogben Farrell Financial Planning can help you with protecting your most important asset (you and your family), contact our office today.

Why insure?

Insurance provides peace of mind.  If an unexpected illness or accident were to impact your life, the financial effect to you and your family could be minimised, due to having sufficient insurance cover in place.  Like home or car insurance, personal insurance is something you pay for, hoping you never have to use it.

Some of the questions you need to ask are; if I am unable to work, how long can I provide for myself and my family? Who will pay the bills, the mortgage and the like? If you were to die or be permanently disabled, how will your dependents be provided for and how will this affect their lives?

Life Insurance

Life insurance provides financial protection for your family if you were to die.  The amount of cover you need varies, and is based on your debt levels, financial commitments and income needs.  The cost of life insurance varies depending on your age, occupation and health levels.

As life insurance is usually not tax deductible to an individual, often it can be advantageous to take out this type of insurance within superannuation, as typically the super fund can claim a tax deduction for the premium. This has the additional benefit of being funded by your super rather than your own take home pay.

Total and Permanent Disability (TPD) Insurance

TPD cover is often purchased with Life insurance.  TPD is typically paid out if you are unlikely to be even able to work again due to illness or injury.  The precise definition of TPD varies between insurance companies so it is important to seek professional advice about which policy is suitable for you.  TPD usually used to cover debt, medical expenses and the cost of modifying your home to accommodate permanent disability. It may also be used to provide some income replacement.

Similar to Life Insurance, TPD cover is often taken within super due to the tax and cash flow advantages.

Truama Insurance

Trauma cover will pay a lump sum to you if you suffer a specific traumatic event, such as being diagnosed with cancer or a heart attack.  The payment is made when the diagnosis is confirmed, provided you survive for at least 14 days (or less depending on the insurer). You do not have to cease work to qualify to receive this benefit.

Trauma cover is designed to help cover the immediate costs of a significant medical event, or just some breathing space while you recover from your illness.

Income Protection

Income Protection insurance will pay a monthly benefit if you are unable to work due to illness or injury.  You can usually insure up to 75% of your pre tax salary.  Benefit payment periods and waiting periods can be tailored to meet your personal situation.

Income Protection will cover both temporary and permanent disablement.  The premiums for Income Protection are usually tax deductible.