Do you know what you’re insured for?
One of the greatest misunderstandings of all time is that the insurance cover in your superannuation is a magic panacea for whatever life throws at you.
Most of us have default insurance cover as part of our superannuation policies. If you belong to an employer-designated or industry-based superannuation fund, then you may have some insurance – life insurance, for example, and you may also have a basic level of income protection insurance.
Why you need tailored insurance
Many people think this is all they need. After all, insurance is complicated, and it can be expensive.
But, says Julie Nipperess of MoneyLink Financial Planning, complacency can be costly.
“if you’re in the middle of a health crisis or you’ve lost your job and you have a big mortgage and school fees to pay, and you need to eat, then really, the little bit extra you spent on premiums for the right cover is not going to be weighing on your mind.
“You’re not going to be doing too many handstands if you saved yourself a bit of money on your insurance premiums if it’s not going to pay out,” she says.
Tailored insurance means exactly that – it’s a type of cover, and a level of cover that you may never need, but if you do, you’ll be grateful for it.
Trauma insurance – which will cover a major accident or a life-threatening illness is something that most Australians don’t have. Similarly, Total and Permanent Disability cover, and adequate income protection insurance.
“You need the right type of cover, and enough cover to know for sure that if, for some unforeseeable reason you have to stop work for a long period of time, or you have a life-changing accident, you can sustain your life,” says Julie.
Do you really know what your insurance covers?
“Generic insurance cover, like the cover found in your mortgage, or in your superannuation doesn’t actually cover some specific situations. And in many cases, even if the cover is available, it’s not to the level that people really need to keep the lights on, and groceries in the fridge and other bills paid up.”
As a financial planner, Julie has witnessed first-hand, too many cases where insurance has let people down, and the only way around this is to sit down, with a financial planner, and work out what you’re likely to need. Then you can get insurance cover to suit you.
Your advocate in a time of crisis
“One of the roles of a financial planner is to liaise with the insurers,” explains Julie.
“So if you are ever in the middle of a traumatic life event, then we talk to the insurers, we arrange the payments, we take care of the administration. This in itself – just having someone as your advocate – is such a big relief to people when they are trying to focus on regaining their own health, or when they are stressed about a spouse.”
“Insurance is complex. As Australians we have such a good track record of insuring our cars and our belongings, and even our health. But we’re not good at insuring ourselves for the potential of something going wrong.
“You are the biggest asset you will ever have … not your car … not your house … you. Yet most people do not insure themselves and their ability to keep everything else going. Your car isn’t going to go too far if you can’t put petrol in it. Your house will be sold if you can’t meet your mortgage payments … it all stops if YOU stop. Your first priority is to ensure that YOU are insured!” says Julie.
And you hope it will never happen, but this is life. It’s unpredictable. It’s always better for you, and your loved ones, to be prepared.”
Julie Nipperess is an Authorised Representative of MoneyLink Financial Planning Pty Ltd, an AFSL holder, No. 247360.
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