Did you know that 95% of Australians don’t have adequate insurance?1 Insurance can protect you and your family from the unexpected, but it’s important that you review your policies each year, to make sure they’re up to date and reflect any changes to your finances or lifestyle.
With more competition than ever, an annual review of your insurance can also help you get more value out of your policy and ensure you’re making the most of any tax concessions available. Sure, it may not be very fun to think about the worst-case scenario, but it’s far better for you and your loved ones to be safe than sorry.
Here are some questions you’ll need to consider when reviewing your insurance needs:
- Has your relationship status, income, assets or debt levels changed since you first purchased your insurance policies?
- If you were told you could not return to work tomorrow, how long would you be able to maintain your current standard of living?
- If you were told you could not return to work for a few months and needed to pay for exorbitant medical bills straight away, how long would your family be able to maintain their current standard of living?
- If something were to happen to you, who has the legal authority to make business, medical and personal decisions on your behalf?
- Who will look after your family financially on your death?
- If the unexpected occurred, how would your family pay for your mortgage, loans and other debts?
Super funds often provide three kinds of insurance for members: life insurance; total and permanent disability; and income protection. Purchasing insurance through superannuation can attract tax concessions, reducing the cost of your policy. However, you may need to consider additional insurances outside of your superannuation account, particularly if you’re self-employed or a trustee of a self-managed super fund.
For example, trauma insurance provides benefits as a lump sum if a person is diagnosed with a range of specified critical illnesses, but isn’t eligible for total and permanent disability cover. This can help pay for treatment costs and lifestyle changes that may be beyond what income protection payments will cover. Care needs to be taken with policies in Super Funds to ensure that you have access by satisfying a condition of release.
When assessing your insurance cover, it’s a good idea to also review your will and estate plan, to ensure that your assets will be distributed according to your wishes and your family is protected in the most tax-efficient way possible. Everyone has different insurance needs, so it’s important to make a plan that’s tailored to your family, so you can protect their financial future.
You should seek professional advice from a life insurance advisor to review your needs. Please feel free to have a general discussion with one of the Sullivan Dewing team to make sure you’re prepared for the worst-case scenario. Contact Us.
 Lifewise/NATSEM Underinsurance Report – February 2010