Insurance is all about protecting what you have now and what you need to have in the event of the unexpected.
As you travel through life, the protection you need is likely to change. The key to selecting the right insurance is understanding your present needs and making sure you have both the right sort and level of cover.
Being over-insured is a waste of money, but it is also a financial risk to have too little insurance in place. With this in mind, let’s look at the types of insurance that may be particularly relevant to each life stage.
Just starting out
If you’re just starting out in your career, you probably recognise that it is important to insure valuable assets such as your car. Your most valuable asset however, is your ability to earn an income over your lifetime. As your income starts to rise, or you take on more debt, such as a home loan, it becomes more critical to have the right levels of income protection insurance and possibly life cover in place.
The family years
Once you have a partner, and potentially begin a family, life and TPD insurance becomes especially important. It is essential for your family to be able to survive financially if you were to pass away unexpectedly, or become permanently disabled. Even if only one of you is working, it’s important for both parents to have appropriate life and TPD cover in place – not just the major bread winner.
While raising a family, our financial commitments are often at their highest. This makes income protection insurance particularly important.
As you age, the likelihood of experiencing medical conditions such as heart attack increases, making living insurance worthwhile. Living insurance will provide an additional lump sum to assist with medical and other costs in the event of serious illness or injury.
More Australians are choosing to work until much later in life, and if that sounds like you, income protection insurance remains relevant until you hang up your work boots. While your children may have grown up and be establishing lives of their own, life insurance can continue to play an important role.
Five reasons why insurance matters
Why is insurance important? Let’s look at five key reasons.
1. Protection for you and your family
Your family depend on your financial support to enjoy a decent standard of living, which is why insurance is especially important once you start a family. It means the people who matter most in your life may be protected from financial hardship if the unexpected happens.
2. Reduce stress during difficult times
None of us know what lies around the corner. Unforeseen tragedies such as illness, injury or permanent disability, even death – can leave you and your family facing tremendous emotional stress, and even grief. With insurance in place, you or your family’s financial stress will be reduced, and you can focus on recovery and rebuilding your lives.
3. To enjoy financial security
No matter what your financial position is today, an unexpected event can see it all unravel very quickly. Insurance offers a payout so that if there is an unforeseen event you and your family can hopefully continue to move forward.
4. Peace of mind
No amount of money can replace your health and wellbeing – or the role you play in your family. But you can at least have peace of mind knowing that if anything happened to you, your family’s financial security is assisted by insurance.
5. A legacy to leave behind
A lump sum death benefit can secure the financial future for your children and protect their standard of living.
Insurance is important for your financial wellbeing so it’s worth speaking to an expert who can recommend the insurance solutions that are right for you and your family. To explore your options, please contact Darren Foster on 03 8393 1000.
Darren Foster, Senior Financial Planner, Paris Financial
Follow me on Twitter @darren_df