Insurance is not money down the drain
If you pay thousands in insurance premiums every year and never make a claim, it could still be money well spent. It is tempting to view insurance as a one-way street. After all, we spend thousands of dollars every year on expensive premiums, but what do we have to show for it?
But as anyone who has ever had to make a claim will attest, there is nothing as precious as insurance when you really, really need it!
“It is that old adage that as soon as you take out insurance you will never, ever make a claim.”
It is expensive, but bear in mind that insurance really comes into its own when something happens to you. It is really an important part of a financial plan because if you don’t have it then the costs can be astronomical.”
Protection is Vital
The insurance you need will vary from person to person, but as a general rule everyone needs to make sure their major assets, their health and income are protected. This includes travel insurance which can sometimes get overlooked as it is the last thing a person wants to organise when they are planning to go on a holiday.
The reality is you need to play the “worst-case scenario” game with your situation to assess what insurance is needed. It is morbid but you do have to look at what would happen if someone in the marriage died or was unable to work for an extended period of time. While some have death and disability support cover, very few people think to take out income protection insurance which covers a person for up to 75 per cent of their wage if they are unable to work through illness or injury and critical illness cover to cover the cost of health services to deal with such things as cancer and heart disease.
All of these risks are extremely important to deal with. For most of us the household budget is tight but what you happen if could mean a complete financial disaster could be unleashed.
Check Your Cover
Having multiple insurance policies may offer you peace of mind, but insurance documents are complicated beasts and it is important to read the fine print.
And we are not just talking about the annual premiums. You need to understand what you are covered for and make sure you read the section that details the occasions when insurers may not honour a policy. For industry super insurance there will be things that are excluded from the policy, too, so make sure you read the documentation very carefully. A non payment of a death or total and permanent disability claim is going to have tragic consequences.
Honesty with the insurer is critical. Trouble often arises when people attempt to keep their premiums down by fudging details or not updating their details when their circumstances change.
Always be honest about any pre-existing conditions as you have a duty of disclosure to the insurer and they may simply refuse to pay out if you are not honest from the very beginning.
Doing this yourself can be a time consuming exercise and without the right expertise how do you really know you have got all of this right?
Your policies need to be reviewed every year to make sure it is still competitive and updating as your situation changes. What happens when you have a claim?
We suggest that you talk to us about how we can assist with both advice and support in making sure you have all this adequately addressed.