We don’t need insurance until we do.
Protecting your wellbeing and your wallet
“Do I really need this insurance?” It’s probably a question you’ve asked at some point when deciding whether to part with your money. But maybe the real question should be “What if I became ill, how would we cope?”
Your health and wellbeing are the most important assets you have, so it pays to put in the hard yards and get your head around the tricky topic of insurance. Illness or injury can strike at any age or life stage, and it certainly doesn’t wait for the most convenient time to happen. Having peace of mind about having enough money if things take a nosedive could be your best investment yet, as well as helping you sleep at night.
When insurance is a good idea
Often insurance can come on your radar off the back of someone you know falling really ill, or when you read something scary in your news feed. These events can make you stop and think but you don’t need to wait for a warning signal. In fact, getting on the front foot ahead of major life changes is often the best reason to get your insurance sorted.
Here are some scenarios to have a think about:
Reading the fine print
But first, a word about insurance policies. While having a general understanding of what type of policy covers what, it’s no substitute for reading your insurance Product Disclosure Statement (PDS) and knowing exactly what you’re getting. Just like travel, or home and contents insurance, policies and the amount they pay out can vary a lot. So it’s worth reading the fine print on something so important in your life.
Protecting your income
If you’re working and you or your family rely on your income to cover the bills, you should be giving serious thought to taking out insurance to protect your income. You have three options for this:
Covering yourself for critical illness
One of the most important types of insurance you can get is the one you can’t get through your super fund. Trauma (also known as critical illness) cover will pay you a lump sum of money if you are diagnosed with a serious illness, such as coronary and cancer illnesses. These conditions often need years of treatment or rehabilitation, which can be very hard to manage without any financial support. Trauma cover can work hand in hand with income protection, which gives you regular payments instead.
Trauma cover isn’t cheap but it certainly pays off if you need it. And in the event, you’re dealing with a serious and stressful treatment such as chemotherapy, you won’t have to worry about money or spend time and energy trying to keep earning an income.
One caveat about trauma cover – it doesn’t cover you for ‘low level’ strokes or cancer where your work is not going to be significantly interrupted. For example, if you need treatment once a week, this would not be considered a serious interruption and the insurer is unlikely to pay out your claim. Each policy is different and it’s important to understand what to expect before taking out any insurance cover.
Source: MLC