Protect your capacity to earn
With
opportunities come risks. The key is to make the most of your opportunities,
while avoiding or at least reducing, the risks that may prevent you from
achieving your goals. Of course, some risks cannot be avoided entirely so you
may need to look at transferring these risks to an insurance company. You may
consider one of the following types of insurance.
Income
Protection Insurance
Income
insurance can provide you with up to 75 per cent replacement income if a
disability, illness or injury prevents you from working. This can go a long way
to maintaining your living requirements.
Life
insurance
Life
insurance is one of the oldest forms of personal protection insurance, providing
one-off cash payment in the event the insured dies.
There
are many reasons why you might want to obtain life
insurance:
·
to
support your family’s life goals after you have gone
·
to
pay out any loans (mortgages and personal debt) in the event of your
death
·
to
buy a full share of a business if your business partner dies (buy/sell
insurance), and
·
to
pay for your funeral
Some
life insurance plans may include a terminal illness benefit, which provides an
advance payment of the total sum insured if you are diagnosed with a terminal
illness. Alternatively, the policy may pay the cost of a financial plan for your
spouse or other dependants in the event of your death.
Life
insurance policies are often flexible enough to allow for increases based on
changes in your life – for example, the purchase of a new home, an increase in
your income or the expansion of your family. Policies can also generally be
increased to accommodate inflation. Many policies provide a total and permanent
disability option. This covers you if you cannot work due to a total and
permanent disability and need to adjust your lifestyle
accordingly.
Unfortunately,
when it comes to life insurance, the overwhelming majority of people,
particularly the young, are underinsured. While you should guard against
over-insuring and you need to be able to afford what you are buying, most people
do not hold enough insurance*.
*EXX&R data
expertise & research: “Estimates of the extent of underinsurance in
Trauma
insurance
Trauma
insurance can help you cope financially with the impact of a disability, illness
or injury. Trauma insurance is paid as a lump sum and can be used to pay for
changes to your lifestyle or for care required as a result of the
trauma.
Child
trauma insurance
Some
insurance policies contain a children’s trauma option. This can cover (often to
a set maximum of $50,000) up to five of your children (usually between two and
15 years of age) against certain events.
Total
and permanent disability insurance (TPD)
TPD
covers you for disabilities that totally and permanently prevent you from
working. TPD is paid as a lump sum. Many TPD policies pay the benefit after the
insured has been totally and permanently disabled for up to six
months.
Business
expenses insurance
Business
expenses insurance can help your business cope financially if you are unable to
work and contribute to your business earning an income. It
covers:
·
electricity,
gas and water rates, general insurance premiums, cleaning, laundry, heating and
telephone accounts, leasing of equipment or motor vehicles and dues to
professional bodies
·
rent
or the regular interest installment payment of any business loan or mortgage
·
salaries
of employees who do not contribute directly to your earnings or your business’
earnings and costs directly related to those salaries (for example,
superannuation), and
·
other
fixed expenses, property rates for example, that are normal and customary in the
conduct and operation of your business
Few
people can afford to insure themselves against all the risks they face in life.
However, most of us can insure ourselves against the risks that are more likely
to affect us. A good rule of thumb is, ‘protect yourself against the risks you
could not afford, if they occurred’.
Putting
safety nets in place ensures your capacity to earn is protected throughout your
life, and this helps to make your life goals more
achievable.
For more
information on how Momentum Wealth can assist you with your Risk Insurance
needs, contact
