Life Insurance: Personal Risk Protection
Life insurance provides essential personal risk protection against financial impacts from disabling events. These can harm both your financial well-being and wealth accumulation strategies.
Daily personal risks, such as health issues or physical injuries, are often unavoidable. You will mitigate the financial hardships from temporary or permanent disabilities, with proper coverage.
Financial Impact: Personal Risk Protection
Australians are critically under-insured, with many lacking adequate or appropriate coverage. Reasons include distrust in insurers, perceived high costs, or the belief that insurance isn’t necessary.
Some superannuation-linked policies are restrictive, leading to concerns about claim payouts and coverage loss when changing employers.
Portfolio of Personal Risk Protection Products
An effective life insurance portfolio ensures financial plans remain on track despite income disruptions. Consider these options:
- Income Protection Insurance: Replaces lost income during illness or incapacity, providing a regular income stream for a set period.
- Trauma (Critical Illness) Insurance: Provides a lump sum upon diagnosis of specified illnesses or disabilities.
- Total and Permanent Disability Insurance: Offers a lump sum after medical confirmation of a continuing disability.
- Term Life Insurance: Pays a lump sum to beneficiaries upon the insured’s death.
Choosing the right structure, ownership, and mix of policies is crucial to ensure adequate protection. Whether life insurance should be inside or outside of superannuation depends on individual circumstances.
Why Proper Life Insurance Matters
Prudent advice from a wealth management adviser ensures:
- A thorough needs analysis for appropriate coverage.
- Selection of the right policies.
- Correct ownership and beneficiary structures.
Regular reviews of your coverage are essential.
Continuum Financial Planners: Here to Help
Our advisers at Continuum Financial Planners are ready to review your personal risk insurance portfolio. For more information, visit our website, or call us at 07 3421 3456.
(First published in July 2013, this article has been occasionally updated, most recently in September 2024.)
