Nobody likes to think the worst will happen, but it is always better to be prepared for the worst than to be scrambling about when something happens.
This week we take a proactive look at a few ways that you can protect your assets both financially and physically with a number of different types of insurance options.
Are you covered with the right amount of insurance? Find out below!
1. Home Contents Insurance
The average Aussie household is underinsured by up to 30%. The problem with being underinsured is that in an event that you need to use your insurance policy, your insurance company can pro rata down the level of cover you have by the amount you were underinsured.
This means less money in your pocket when you need it.
If you’re worried that this could be you, it’s best to get in touch with your insurance provider or an Insurance Broker who can give you a proper evaluation of how much insurance you truly need.
2. Flood Insurance
Some home contents insurance specifically excludes flood insurance. With an increase in natural disasters lately, you may be exposed if your property lies within the 100 year flood area for your home.
If you’re in a high rise building maybe this isn’t what you need, however, if you’re in a stand alone house or low rise building, you’re better to check if you are exposed before you call the insurance provider.
How do you find out if you’re living in an area subject to flooding?
Get in contact with your local council to find out if you are within the 100 year flood plain for your local area. If so, talk to your insurance provider to get a quote to extend your insurance policy to cover this risk.
3. Life Insurance
Life insurance is a policy on somebody’s life, and is generally paid out upon their death. It’s designed to ensure dependents aren’t left in the lurch from the unexpected death of a primary income earner.
This is not a tax deductible expense unless it is in your super fund. Check how much you’re insured for and whether or not the insurance policy would be enough to pay out your debts (eg mortgage on your home) at the very bare minimum. If it isn’t, ask your super fund how much it would cost to increase that level of cover, and then make sure you increase your co-contributions to super to cover the increase in premiums (you don’t want your super investment balance to go backwards).
Whilst you’re at it, check that your beneficiaries are up to date!
4. Income Protection Insurance
Income protection is essential if you are the primary income earner in your household.
It covers you for injury that stops you working / earning an income – either temporary or permanent, and provides peace of mind for you and your dependents if something happens to your income earning abilities.
Unlike Life Insurance, Income Protection Insurance is tax deductible. Again, check if your Super Fund has a policy already for you and check the values of cover. A good insurance broker will be able to help you figure out how much insurance you’ll need for your situation.
5. Health Care Insurance
If you’re earning more than $90,000 per year or a combined income of over $180,000 (adding yours and your spouse’s income) then you will need Private Hospital Cover. Otherwise you get charged the Medicare Levy Surcharge when you do your tax return.
Extra benefits / optional extras is generally not really required and has no impact on your income tax return. We also find that you tend not to use all those extra benefits and that the cost you incur throughout the year (eg on massage etc) is similar to or less than the annual additional premium paid!
We hope this helped you understand the basic insurance types so that you can protect your assets.
If this was of help to you, or you know somebody that it could help, please share on social media!