Protecting your greatest asset

28 Nov 2014

By Shadforth Financial Group

If you're like many Australians, you've put off obtaining personal insurance, thinking that life changing accidents or illnesses always happen to someone else. With all of the day-to-day expenses you and your family have to pay, it can be hard to justify adding another cost on a just-in-case basis. However, it only takes one unforeseen illness, injury, or death to turn your world, and finances, upside down.

Luckily, there are a few options available that can help you protect your biggest asset: your ability to earn.

One option is automatic insurance cover attached to your superannuation fund, which has been an Australian standard for a number of years now. While insurance cover through your super is more restrictive than insurance outside of super, it is certainly better than nothing when it comes to protecting yourself and your family. Another option is to hold cover under super in a retail environment, which provides more flexibility.

Why have insurance through your super?

Insurance through super can be a great option for people who are unable to access cover due to health, pastime, or occupational restrictions. It can also provide the opportunity for cover for people who wouldn't normally be able to afford the additional expense. As premiums for this cover are paid from your super fund, it does not affect your day-to-day cash flow. Though insurance held through super can have restrictions not seen with other cover, its cash flow benefits can make it an appealing option.

Premium increases are already starting to apply to automatic cover in super and it's likely we'll see more in the future. As such one of the major benefits of having this type of cover ie, reduced cost, may disappear in the not too distant future. If you've shown little interest in the benefits attached to your super so far, you may be doing yourself a disservice in the changing marketplace.

What if I need more cover?

Many retail insurance policies allow you to 'top up' the cover paid for by your super fund with valuable additional benefits. If you ever have to make a claim, it will first be assessed under your super, and then under your retail insurance policy you've added if your claim isn't covered by your super insurance policy.

It's important to seek advice regarding appropriate levels and types of cover you need so that you can feel secure in the knowledge that if the worst occurs you and/or your dependants will be cared for.

Is it time to re-evaluate your cover?

As you age, you become more likely to make a claim, and so your premiums are likely to increase. However, as people accumulate assets, pay off debt and have children fly the nest, their need for insurance cover can actually decrease. This reduced level of cover can then translate into a decrease in the premiums you have to pay. But in today's world of later parenthood, blended families, second families and high mortgage levels, this may not be the case for you.

So what can you do? Firstly, find an adviser you are comfortable with and discuss your current and future needs. They can help you determine the level and type of cover that's right for you.

But mostly importantly, don't put off getting covered. With the different options available which make it easier and more affordable to access personal insurance cover, it may be the best move you ever make!

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