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Home Cash Karma Latest News Should you be expecting the unexpected?

Wednesday, 05 January 2011 04:36

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Should you be expecting the unexpected?

06/10/2010
Provided by Mercer. The information in this article does not necessarily reflect the views of the Trustee.

In living our day-to-day lives it’s easy to push aside thoughts of what might happen in the case of death, illness or an accident requiring time off work. These are hard things to think about – and it’s often easier to push them aside rather than consider what you might do if something happens. 

But the plain fact is, planning now and factoring in adequate insurance cover means that if something bad does happen, you and your family will have one less thing to deal with – and be covered financially.

Most workers have some form of insurance through their super fund, but many are not aware of how much cover they have, and may not actually have enough cover. In fact, a 2005 study1 showed that 60% of Australians only have enough death cover to provide income to their dependants for less than 12 months. A sobering fact if you think about mortgage payments, education expenses, bills, food costs and so on.

Consider the options…  

At a basic level, there are three options when it comes to planning ahead.  

Firstly, you can decide to accept the risk of something happening and deal with it if and when the time comes. You may decide that you have enough savings to see you (and your family) through in the case of serious illness or death.  

Secondly, you could decide to avoid all activities that pose a serious risk, like sky diving or white water rafting. You might even contribute to good health and reduce your risk further by exercising regularly, eating well and avoiding alcohol and smoking.  

Or you could look at the third option: transfer the risk. This means acknowledging that perhaps your own resources aren’t enough and purchasing an insurance policy that would provide adequate financial support to you and your family.

Make sure you’re covered 

Making sure you’re covered may mean supplementing your existing insurance cover or, if you’re not covered at all, starting with a new policy. Here we outline a number of different steps you can take.  

You can contact your super fund and find out what sort of insurance they offer. You may already have some insurance and it may also be possible to increase your cover or add some different types of insurance that are suitable for your circumstances. Your super fund’s Product Disclosure Statement (PDS) may be a good place to start as it will outline the choices available to you and the cost of all your options. There may also be fact sheets and forms that further explain your insurance choices. If your super fund’s insurance doesn’t meet your needs, you may consider taking out personal insurance with an insurance company.  

Have a look at what other insurers provide and see if their products meet your needs. Consider your current situation and decide what you need in terms of death and disability cover or income protection cover. The insurance company can give you a quote for the cost of the insurance and outline the options available to you. It’s worth contacting a number of different insurers (and examining their offers carefully) because the terms, conditions, features and benefits can differ markedly from company to company.  

As all this can be time consuming as well as confusing, you have the option of talking to a licensed or appropriately authorised financial or insurance adviser who can do it all for you. They can determine the amount of insurance you’ll need as well as looking at what your super fund offers and what other insurance may be to your benefit – that is, help you determine the best options to meet your individual needs. They will be able to provide a range of choices and advice around issues such as taxation and nominating your beneficiaries. Importantly they help with the completion of application forms and the insurance underwriting process (if required) which can be complex and lengthy.  

This information has been prepared by Mercer (Australia) Pty Ltd ABN 32 005 315 917 for general information only. The information does not take into account your personal objectives, financial situation or needs. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult a licensed or appropriately authorised financial adviser before making any financial decision.