Protect yourself, your family and your wealth.

The final installment in the Big Three.

Yes we are talking about insurance.  I have never met anyone who likes paying insurance.  However, I would bet that there are a number of people out there, you may even know one, who is glad that they did pay for it.

Sadly, there are probably a lot more who regret not ever taking the option to protect themselves.

Let me say first up, we do not sell insurance, but this is a discussion about some of the important factors that help build, maintain & protect your wealth.

What we are talking about here is protecting your wealth and perhaps your greatest asset, you.  No doubt you insure your car and your house against potential loss. Have you ever thought what might happen to you and those around you if you were seriously ill, injured or worse? How would you or your family cope financially?

You can make your own decision about whether you want insurance or not. The question should be what type of insurance do you need and how much of it?

So here are a few facts:

Income protection

In the event that you are unable to work due to illness or injury, income protection provides you with a monthly benefit. This is paid for an agreed period of time while you are unable to return to the workforce.

The premiums that you will pay for this type of policy are generally tax deductible. However, any payments you receive as a result of this policy are classified as assessable income for tax purposes.

Life insurance

Life insurance helps alleviate the financial burden your family may be left with in the event of your death. Usually paid as a lump sum, your dependants may use this money to assist with medical costs, funeral expenses or help secure their financial future.

The cost depends on the amount of cover you choose (age, gender and smoking status are also determining factors). The level of cover you have should be reviewed regularly to ensure it remains suitable.

When making a decision on how much cover you require, you should consider the following:

• Your children’s school fees

• Services you would require if you were unable to care for your children, such as a nanny

• How much you would require to meet your day‑to‑day living expenses, and

• Current liabilities, such as your mortgage.

Total and permanent disablement (TPD)

This is generally taken as an optional extra within a life insurance policy, but can also be arranged as a standalone policy. In broad terms it provides a lump sum in the event of a permanent disability that prevents you from returning to work.

This lump sum can be used at your discretion to provide for your dependants, to compensate for the loss of your income, repay your debts or cover capital gains tax liabilities.

There are certain conditions that need to be met to receive a TPD benefit payment; these vary significantly between insurance providers. Before taking out TPD insurance it is important that you understand the conditions under which the insurance company will pay a claim.

Trauma

Trauma insurance is generally paid as a lump sum upon diagnosis of an eligible condition (eg cancer, heart disease), and the funds can be used at your discretion.

You can use it to pay for additional medical care or to pay off the mortgage and relieve the financial pressure on your family.

This benefit is paid to you when you are diagnosed with an eligible condition. This will ensure that you and your family have a lump sum to cover rehabilitation, carer costs or just day‑to-day expenses when you most need it.