You probably have a car, home and health insurance. Most people are not, however, covered for the following situations:
What if you were unable to work for six months?
What if you were suddenly unable to work? Even if you’re fit and healthy, we can all fall sick suddenly or have a serious accident as Monica and Tania discovered.
Case Study - Income protection insurance
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Monica |
Tania |
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Age
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Late 30s
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Late 30s
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Marital status
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Single
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Single
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Children
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1
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1
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Occupation
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Self employed
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Self employed
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Mortgage?
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Car insurance
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Health insurance
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Income protection insurance
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Monica and Tania were both fit and healthy, self-employed, single mothers until they each had a serious car accident that stopped them working for six months. Their health insurance covered most of their medical bills but not their mortgages or their childcare expenses or other household expenses. Fortunately, Monica had income protection. Unfortunately, Tania didn’t have any income protection. What would happen to your family if you couldn’t work for six months?
Maximum income protection cover - 75% income
Unfortunately, you can't get insurance to cover your entire income in the cases of illness or injury. You can get cover up to only 75% of your income (eg If you get paid $4,000/mth, the maximum income protection cover you could get would be .75*4000, which is $3,000/mth). Some income protection covers will also pay an extra 9% into your superannuation account.
How much income protection do you need?
Some super funds provide income protection but is it enough? Sometimes the cover will be for only a year or two after the illness or accident rather than up to retirement age. To make sure you have enough income protection to provide for your family, it’s best to talk to an expert. We can help you calculate how much cover you need.
What happens to your family if you die at 45?
You might be on track to reach your retirement savings target by the time you reach 65 but what if you die at 45? If your savings aren’t able to get the full benefit of 30 or 40 years compound interest, your nest egg will be considerably smaller. Where would that leave your family?
Life insurance – protecting your family
You want to be able to provide for your family no matter what happnes. The best way to make sure they’re covered is to take out life insurance. Before you can do take out insurance there are two important questions you need to consider:
How much life insurance do I need? Insurance Calculator
Use our Insurance Calculator to help you work out how much insurance you need to protect your family.
Want help protecting your family with life insurance?
If your cover is inadequate for your family and you want to explore your insurance options, call a Money Coach on 1800 046 144 or email us
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Should I get life insurance with my super or a stand-alone?
There are two ways you can get life insurance - within your superannuation or outside your superannuation (a standalone policy). There are advantages and disadvantages with each approach.
What are the advantages of having life insurance within your super fund?
Here are some reasons it could be good to have your life insurance within your super fund:
- Automatic cover – some funds offer cover without requiring any medical checks
- Cheaper premiums – because they buy in bulk, it might be cheaper through the fund
- Tax concessions – you might pay less tax when paying your premiums via your super
What are the disadvantages of having life insurance within my super fund?
Here is why it might be better to have a standalone life insurance policy rather than cover provided through your super fund:
- Limited cover – it might not provide the protection your family needs
- Limited income protection – the income protection period might be too short for comfort
Need help organising your life insurance?
If you want to make sure you have enough life insurance to provide for your family, call us on 1800 046 144 or email us.
Where do you want to go now?
You’ve taken a big step towards protecting your family by taking out income protection and life insurance. What would you like to do now to help provide them with a brighter financial future?
Related material
Superannuation Workbook