YOUR INSURANCESUVIVAL GUIDE

INSURANCE fact sheet

This Insurance Fact Sheet will give you a snapshot of how insurance works, the different options available and some of the common mistakes to avoid

There are numerous personal insurance products. These include:

Life insurance provides a lump sum to your beneficiary in the event of your death to cover things like mortgages, debt and replacement income.

Total & permanent disability (TPD) insurance provides a lump sum if you become permanently disabled and never able to work again.

Income protection insurance provides a monthly benefit if you’re unable to work due to injury or illness.

Trauma insurance provides a lump sum to help cover medical expenses if you were to suffer a certain condition, such as cancer, stroke or heart disease.

Child trauma insurance provides a lump sum to the guardian/parent if their child were to suffer a certain condition. This type of policy must be linked to an adult’s policy.

Business expenses insurance provides a monthly benefit for self-employed people to cover fixed expenses. The maximum pay-out period is one year.

Concise tips, facts & questions to help you get it right

Personal insurance products

There are many variables that determine which insurance types might be right for you, such as your age, occupation, current health and income.

It’s important to recognise that your most valuable asset is you! Insurance is an integral part of any financial plan and should ensure appropriate protection for you, your family, your income and your assets.

Here are some questions to help you decide what you might need:

· Do I have any debts? If so, what are they?

· If I were to pass away prematurely, how would my family cope with the mortgage?

· Would I be able to pay the bills for 12 months if I were to get sick or injured?

· What impact would it have if my partner were to fall ill, suffer an injury, or die?

· What insurance do I currently have in my superannuation and what does it cover?

· How much do my dependents need for personal necessities such as food and clothing?

· How would I continue to pay for education fees and other expenses if my income diminished or stopped suddenly?

As well as choosing the most relevant cover, it’s important to consider affordability. You should ensure that your financial plan provides you with adequate cover but also allows your superannuation fund or personal investments to grow so you can achieve your retirement goals.

What do you actually need?Life is full of choices, and today there are more than ever before. Are you falling for the marketing hype? We’re bombarded with messages about quick and easy insurance. But generally, you’re being given a price and not advice.

Here are five factors to consider when it comes to direct marketing insurance.

CostIn most cases, direct cover is funded by your own cash flow and it’s often more expensive than an adviser-sourced product.

FeaturesDirect or industry funds generally offer basic cover but without many extra benefits. Retail products tend to have a wider range of features and built-in options that can be tailored to your individual preferences and budget.

No medicalsWith no medicals, a direct insurer must price higher in anticipation of the risks associated with insuring the unknown. And, if you haven’t discussed your pre-existing conditions, you might come into trouble around claim time.

SpeedDirect insurance offers a quicker and more convenient process – but it’s also less personalised. Consulting with a professional adviser takes time as they research and tailor insurance to your personal needs.

Guarantee of payoutDirect insurance usually offers no guarantee that a payment will be made, as often these policies are underwritten at the time of the claim. Retail insurance is generally underwritten up front, which means the payout is guaranteed providing there are no pre-existing medical conditions that were intentionally not disclosed to your adviser.

Be wary of direct marketing insurance

· Look carefully at your existing situation. It’s wise to know exactly what your insurance will or won’t pay, and in what circumstances.

· Seek independent advice. An independent adviser doesn’t work for one particular insurance company; they recommend insurance policies from several companies.

· Think it through. Think about what’s important to you. How much are you willing to put aside?

· Be honest. The reasons insurers ask so many questions is to get everything out in the open from the start, so that

How to avoidcommon insurance

mistakes

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General Advice WarningThe information contained in this document is not intended to be advice, it is for information purposes only. Where any part of this document is construed to be advice it is General Advice only. It has been prepared without taking into account any individual’s objectives, financial situation or needs. Before any person acts on any information in this document they should consider the appropriateness of the information, having regard to their objectives, financial situation and needs. Before making any decision about whether to acquire a product individuals should seek professional advice from their licensed adviser.