Insurance is one of the key tasks on the life admin list. But, unlike booking a doctor’s appointment or mover, choosing insurance cover isn’t a simple box-ticking exercise. There are so many types of cover, providers and options that it can feel overwhelming.
You don’t necessarily need to buy every kind of insurance, but you do need an insurance setup that protects your key assets – from your house and car to your earning potential. That way, you’re ready to deal with anything that comes your way.
While different life situations call for different insurances, some things always need protecting.
Here are our insurance must-haves:
1. Protect your home
For homeowners, house insurance is a no-brainer. Most banks and financial institutions require a would-be owner to take out insurance before they will approve a mortgage.
When you take out insurance on a property, you’ll usually need to provide key details about the house to get a quote. Lenders base house insurance on a capped amount – in theory, the cost of building to a similar quality and size. If your details aren’t accurate, you could end up with an insurance cap that doesn’t give you enough cover if you need to rebuild.
2. Protect your lifestyle
Your earning potential is less tangible than your house or car – but it’s probably worth far more than the two combined. It’s not fun to think about, but serious illness and injury can happen to anyone, making it hard to pay your mortgage or maintain your lifestyle.
That’s where mortgage, income protection, trauma and disability insurance come in. These forms of cover all help you maintain your lifestyle, even if the worst happens. You don’t need every single type – it depends on your income, mortgage, job and other factors.
Mortgage protection helps you keep paying your mortgage if an injury, illness or job loss affects your income. Policies include a set period before payments start – for example, three months of being unable to work. Payments are based on your mortgage repayment rates, a set timeframe or until you can return to work.
Income protection is similar but can cover more than just your mortgage. If you’re unable to work due to sickness or an accident, income protection helps you maintain your lifestyle until you can get back to work. In some cases, it will even cover partial payments if you choose to work part-time.
Trauma cover is designed to help you through a tough period – for example, a serious illness, medical event or accident. Unlike mortgage and income protection, trauma cover is usually paid out in a lump sum if you are affected by one of the conditions listed in the policy. The pay-out can help you with mortgage payments, medical costs, rehabilitation or in-home care.
Disability insurance pays you a lump sum if you become permanently disabled for any non-specific illness or injury – and it’s unlikely you’ll ever be able to return to your job or kind of work. This type of insurance will ease the financial burden on you and your family by covering costs like debt, medical expenses, ongoing disability care and some everyday living expenses.
3. Protect your loved ones
Life insurance protects your family and loved ones after you’re gone. It’s not essential for everyone, but if you have a mortgage, a young family or other dependents, it should be part of your insurance setup. With life cover, your family – or nominated person – gets a lump sum payment if you pass away. The amount is usually set to pay off the remainder of your mortgage but can also be used to help with bills and funeral costs. It’s not pleasant to think about, but it can provide much-needed support and breathing room at an extremely difficult time.
4. Protect your health
Private medical or health insurance reimburses you for medical expenses related to surgical, non-surgical and non-emergency conditions. These could include specialist examinations or tests like an MRI – most of which come with a hefty price tag. It also covers the cost of subsidised and non-subsidised medicines, and you’ll avoid any long waiting lists for non-emergency treatment.
There is no fixed insurance amount that you can take out, but generally, cover is around $300,000. It all depends on the level of risk in your lifestyle and what you choose to claim.
Beyond the basics
While house, income and life insurance are essential, they’re not the only types of insurance out there. Depending on your circumstances, you may also want health or disability cover. Whether your insurance needs are basic or more complicated, it’s important to get expert advice before you sign up, and regularly review your policies. That’s where Global Finance comes in. Our team of expert advisers can help you work through your options and pick the cover that fits your needs.
Get in touch with the Global Finance insurance team today.
The information and articles published on this website are true and accurate to the best of the Global Finance Services Ltd knowledge. The information given in articles on this website should not be substituted for financial advice. Financial advice should always be sought. No person or persons who rely directly or indirectly upon information contained in this article may hold Global Financial Services Ltd or their employees liable.