Can life insurance wait?

Written by Ronald Pratap

on May 4, 2020

When you’re young, it can be easy to think of life insurance as a nice-to-have. After all, you’re probably in good health and have more pressing expenses, right? Not quite.

All it takes is one accident or one diagnosis and everything can change – all of a sudden, insurance will become your top priority as this has happened with 2 clients from our office in their early 30’s.

The only trouble is when you’re already hurt or sick, the ideal time to take out insurance has passed.

So, we know insurance is important, but what are the different types of insurance you might need to start considering from a young age?

Life Insurance

Life Insurance can provide your loved ones with a lump sum payment that can help ensure their financial security in the event of your death, or if you are diagnosed with a terminal illness.

The thing about Life Insurance is that most people think it’s just for, well, elderly people.

But that couldn’t be further from the truth as its up to you whether you leave your family in a unfortunate position if something were to happen to you.

Life Insurance is important for people with young families, which is usually those aged in their 20s, 30s, and 40s.

That’s because if the worst were to occur to you, this policy can kick in and pay off debts that would otherwise have been a challenge for your partner or beneficiary to cover, such as mortgages, outstanding personal debt, car loans, funeral and burial costs.

If you are the main income earner for the family, you may want to consider leaving a lump sum to replace the salary your family will be missing out from to cover costs such as living expenses, educational costs and future outgoings.

Income Protection Insurance

Income Protection can give you an alternative source of income if you’re temporarily unable to work due to an illness or injury that’s left you totally or partially disabled.

Once again, Income Protection is a great fit for those aged between 20 and 50 and will provide you with a monthly benefit of up to 75% of your gross income.

Why? Well, let’s take a mortgage for example – probably the biggest debt you’ll ever take on.

The average first home buyer in Australia is 34-years-old, and takes out a $336,500 loan, according to the Australian Bureau of Statistics.

It’s critical that at this point in your life you have a back-up mortgage repayment plan in place should you become temporarily injured and unable to work.

Income Protection can deliver a steady stream of monthly payments to help keep your household up and running while you recover.

Total Permanent Disability (TPD) Insurance

TPD insurance can provide a lump sum payment if you become permanently disabled due to accident or illness, and are unable to work.

Now, it’s commonly known that young adults – males in particular – are known to engage in more risky behavior – whether that be playing footy, participating in adrenaline-pumping activities  such as motorbike riding or simply in the tasks they undertake at work.

In fact, those aged between 25 and 55 make up more than two-thirds of all workplace injury claims, according to Safe Work Australia.

However, TPD insurance provides you with a financial safety net so you can go on making the most of your life should something unfortunate happen.

Critical Illness Insurance

Critical Illness Insurance also known as trauma cover can provide you and your family with financial freedom by paying out a lump sum if you become critically injured or ill.

Now, when you’re young, the last thing you want is to be struck with a severe injury or illness and not have the time or money to concentrate on recovering.

And that’s the beauty of Recovery Insurance.

It can provide you with a lump sum that’ll give you financial access to the best medical treatment available, allow you to cut back on your work hours, and give you every chance possible of rehabilitating from your serious injury.

Critical illness cover will pay out on diagnosis of a outlined critical condition and plug the gap where TPD or Income Protection insurance doesn’t cover you. The main conditions being heart attack, cancer diagnosis or major organ failure which may still allow you to work.

How to get the ball rolling

Avoid the trap that so many fall into – the time to purchase insurance is before you need it, not after.

It’s also important to remember that your situation is constantly changing, so the type of insurance policies you took out five years ago might not be best for you now.

You insure your home, your car and your lifestyle assets….Why not insure the most important asset being yourself.

To ensure you’re best protected should something in your life go awry, contact us by calling our Oran Park office on 9188 1547 or emailing admin@rpwealthmanagement.com.au.

 

If you liked this article, you might like:

8 Questions to ask about trauma insurance

Adjusting your insurance cover through super

Workers compensation vs income protection: what’s the difference?

What is Indexation in insurance?

The material shown in this article is for general information purposes only. It is not intended to be, nor should it be read as specific personal investment or risk advice.

Before acting on any of the information contained in this article you should obtain special advice from a specialist investment or risk professional, which is appropriate to your specific investment or risk needs, objectives and financial situation.

Whilst all care is taken in the preparation of this material, no warranty is given with respect to the information provided, and accordingly no responsibility for errors or omissions, including responsibility to any person by reason of negligence is accepted by RP Wealth Management.

Ronald Pratap

Principal Financial Planner at RP Wealth Management | Financial Planning l SMSF I Insurance l Property Advisory. Our purpose is to provide our clients with sound advice and direction to assist with their financial affairs and help them make the best choices in achieving what is important to them.

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Very professional and consistent in his work with truckloads of knowledge in his industry. He helped me with my life insurance and did a fantastic job from start to finish. Walking me through the entire process and always following me up. I would not hesitate for a second to recommend Ronald’s services to anyone. Great guy. Great professional. Great service.
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Ronald is great communicator and very knowledgable with his financial advise. He helped my wife and I structure a better protection plan covering life insurance, trauma cover and income protection. Easy to discuss any questions we had and generally very helpful. I highly recommend talking with Ron!
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Ronald is a really easy going guy to deal with. He will go above and beyond to ensure he finds out all the details and gets you the best cover for your circumstances. Ronald made the process of getting Trauma Insurance and Life Insurance very easy - much easier than I thought and it was surprisingly cheaper than I thought it would be too. I really recommend you see RP Wealth Management.
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