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risk insurance

Why You Need Insurance – Risk Insurance Explained


Jan 31, 2016


Is personal risk insurance necessary? Life comes at us fast. In this post, Kym Nitschke explains why you need insurance and how it can add security to your life.

Many families are unexpectedly affected by serious illness or injury or even death. On top of the emotional toll, such events can have a substantial impact on your family’s financial situation. Are you prepared for such an unexpected event?

Having personal risk insurance can be essential to meeting your daily living expenses (mortgage repayments, utilities, groceries and school fees). It also helps out by covering unexpected costs associated with illness or disability (significant medical expenses, rehabilitation or even funeral costs).

Personal risk insurance can play a major role in the security of your family, so it is more than worth the effort to research and obtain.

There are four main types of personal risk insurance, as follows:

Life Insurance

This is a lump sum that is generally payable on death or diagnosis with a terminal illness. A good life insurance policy could put your children through school, pay off your mortgage and even help cover funeral costs to alleviate the financial pressure on your family.

Total and Permanent Disability (TPD) Insurance 

This insurance pays to support you if you are totally and permanently disabled. It helps cover the cost of rehabilitation, debt repayments and much more.

Your insurer will classify TPD in one of two categories: You can’t work again in any occupation or you can’t work again in your usual occupation. Each insurer has a different definition of what is and isn’t considered to be totally and permanently disabled. Read your policy carefully to make sure you know what you’re getting.

Trauma Insurance 

Trauma insurance is also referred to as critical illness or recovery insurance. This sum is paid out to support you if you are diagnosed with a specified major medical condition (a heart attack or cancer, for example). The payment can be used for things such as covering private medical costs, an income stream if you stop working, debt repayments or adjustments to housing and lifestyle.

Income Protection Insurance 

Income Protection Insurance (IP) is a monthly income stream that supports you in the event that you are temporarily unable to work because of illness or injury. IP usually provides cover for up to 75% of your gross wages for a maximum period (generally either two years or until the age of 60).

When taking out personal insurance, remember that each insurer has different conditions and criteria which must be met to be eligible for the payment. Read your policy carefully and ask lots of questions so that you know exactly what you are getting.

It is best to talk to your financial planner about what is required to meet the needs of your lifestyle. Be honest while filling out the application and update your insurer if your circumstances change. Tell the exact truth when making a claim. If the insurer finds you have not been ‘telling it like it is’, you may not be covered at all.

Lower your financial risk and secure the risk insurance plan that’s perfect for you by seeking out professional advice. Nitschke Nancarrow provides you with advice for finding the right plan.

You can send me an email or call the office of Nitschke Nancarrow in Adelaide on (08) 8379 9950.

– Kym Nitschke

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