LIFE INSURANCE

PERSONAL RISK INSURANCE (LIFE)

Life is full of risks and things that could happen – the house burning down, the car being stolen, illness preventing us from earning a living. The good news is that whatever the risk, chances are there’s an insurance policy available to reduce the financial loss we would take should the worst occur.

Insuring our health

Health is a precious thing. If we fall sick and can’t work we still need money to pay the bills. Insurance can help us make ends meet if we are unable to earn our normal income.

There are many types of health-related policies, such as:

  • Medical insurance, which covers private hospital and other medical bills
  • Trauma (also called critical illness), which provides a lump sum if we suffer from certain illnesses or injuries such as cancer, heart disease or paralysis
  • Income protection insurance, which pays a percentage of our income on an ongoing basis if we suffer from named illnesses
  • Disability insurance, which pays out a lump sum for permanent disablement through sickness or accident
  • Mortgage protection insurance, which covers our mortgage if we can’t work

Insuring our lives

Life insurance provides a lump sum of money if we die. In some cases, a portion or the entire ‘sum insured’ is paid out before we die if we are diagnosed with a terminal illness.

There are different types of life insurance cover. The most common one today is term life insurance, which covers us for a fixed number of years such as the length of our mortgage.

Read the fine print

All policies that cover our health or life have exclusions in the fine print. We may only be covered for certain named illnesses or injuries rather than ‘blanket cover’. It’s also very common for policies to have exclusions for ‘pre-existing conditions’, which means any illness or injuries we’ve experienced symptoms for before the cover started.

These types of insurance can be confusing. A broker can explain these insurances and help you lodge your claims.

Making sure you can pay the loan

There are three main ways you can make sure that your home loan is paid if the worst happens.

You can…

Insure your loan – loan or mortgage protection insurance repays your loan if you die and makes loan payments for you in situations when you can’t work such as illness or accident, and redundancy.

 Insure your income – income protection insurance provides an income if you can’t work. They usually cover situations like illness, accident, redundancy and bankruptcy. Payments are based on a percentage of your normal income.

Insure your life – life insurance pays out a lump sum if you die and many policies include an early payout if you are terminally ill. Some also cover critical illnesses such as cancer or strokes.

Which insurer?

It is not enough just to buy insurance. You also need to know that if you make a claim your insurance will provide the help you’re expecting.

Here are some things to consider…

  • A big well-known company is a good investment when it comes to insurance – you want to know they will still be there when you need them.
  • A good claims record is more important than price – so ask friends and family about their experiences with different insurance companies.
  • Read the small print carefully. Look for policies that are written in a language you can understand and that have few exclusions. Ask the company to explain the conditions to you.
  • Ask about a ‘free look’ period – this gives you time to read the policy and change your mind before you start paying your premiums.
  • Ask about payment options – you’ll find it easier if you can match your payments to your paydays and loan payments.

We can arrange your insurance at the same time as your home loan through Oliver Broomfield Mortgage & Insurances

Do you have a Will or Enduring Power of Attorney?

When you buy your home it’s a good idea to make or update your Will. If you die without one it can take ages to get everything sorted out and the people you care about most may miss out. For instance, your partner doesn’t automatically get everything and if you’re not married they may get nothing.

The other thing you should think about is having an enduring power of attorney. This gives someone you trust the power to act on your behalf if you can’t look after your own affairs for any reason.

Both are important legal documents. Your lawyer can tell you more – and may even be happy to produce a Will for you for free.