Taking cover in changing times

Change is a constant. Life is about change, and as we embrace each new milestone and deal with the challenges life throws at us from time to time, we grow as human beings.

Just as life changes, so do your insurance needs. Personal insurance is never a ‘set and forget’ so let’s look at how to ensure you are appropriately covered through each stage of your life. Changes to your insurance needs at any given time are a constant throughout your life.

Insurance through the ages

What you need as a single 20-something building your career is generally quite different from your requirements in your 40s when you may be juggling a young family and a mortgage. Then, as you approach retirement and beyond, perhaps with your mortgage paid off, your needs change yet again.

Whatever your circumstances, now is a good time to consider whether your current policies work for you.

What’s covered?

Life insurance is the umbrella term for four main types of cover – death, total and permanent disability (TPD), income protection and trauma.

Death cover is self-explanatory. It pays a lump sum to your nominated beneficiaries when you die. It is often packaged with TPD, which covers things like living expenses, debt repayment, and medical costs if you are no longer able to work. If your TPD is held through your super fund, generally, this will only be paid if you cannot work in “any” occupation; if it is held outside super, you may be covered if you can no longer work in your “own” occupation.

Income protection cover will pay part of your lost income for a pre-determined time if you get sick or injured and need time off work. It is particularly useful if you are self-employed or a small business owner and don’t have access to sick leave.

Trauma cover, meanwhile, provides a lump sum amount if you are diagnosed with a major illness or serious injury such as cancer, a heart condition, stroke or head injury. Such payments can be a big help with paying medical bills.

Check your super

Death and TPD insurance can often be purchased through your super fund. If, you’ve been out of work and not made any contributions to your super for 16 months, your account may have been deemed inactive under super law and closed.

It’s important to note that if you lost your job, any automatic cover in your super with your previous employer may have stopped. If you have a new employer, the cost may have increased.

It is always wise to check with a financial advice professional about any insurance policies held within your super, especially before making any changes.

Protect your mental health

Not all insurance policies provide cover for mental health without exclusions or additional premiums. Nevertheless, according to the Financial Services Council, insurers paid out $1.47 billion in mental health claims in 2020.ⁱ

If your circumstances have changed, then it may be worth examining whether your life insurance cover still suits your needs and whether there are ways you can save money through lower premiums. For instance, you might reduce the amount you are insured for or remove some of the benefits.

If you would like to discuss your life insurance needs, reach out to us to discuss them here.

i https://www.abc.net.au/news/2021-02-08/insurance-coverage-mental-health-after-covid-19/13122144