Here’s a confronting question: What would you do if the main breadwinner in your household could no longer bring in an income? Do you have a Plan B? Most people don’t. That’s where insurance comes in.

Curve balls. They’re unexpected, often deceptive and it’s impossible to predict their trajectory. That’s why they can be so devastating – in sport and in life. There’s some interesting data now available about the kind of curve balls that can impact your life, your finances and your retirement.

The headline figure is this: one on three Australians could be disabled for more than three months before turning 65.¹ If you combine this with another startling fact – that 60% of Australian families with dependents will run out of money if the main breadwinner can no longer bring in an income – you can see the problem. Curve balls are pretty common, but so few people are prepared for them.

And with mortgages to pay, school fees to fund and your family’s future to think about, it may be time to think about protecting the things you love from the unexpected.

What kind of Plan B do you need?

The last thing you need to worry about when you’re dealing with a curve ball is your finances – how you’ll keep the lights on and the kids fed. That’s where insurance comes into its own. It’s a well-known saying that you only realise the value of insurance when you need it – and you don’t have it. But there’s also a common misconception that is a one-size-fits all drain on your finances. That’s not the case. There are different types of insurance that you can consider depending on your stage of life, industry and goals for the future. You may not need all of them.

Here are the four main types of insurance and the key personal protection needs they meet.

Income protection:

 can provide a monthly payment of up to 75% of your income if you’re temporarily unable to work due to illness or injury. This money could be used to meet your ongoing living expenses and financial commitments while you recover.

Critical illness:

can pay a lump sum if you suffer or contract a critical condition specified in the policy (eg cancer, a heart attack or a stroke). This money could be used to:

• cover medical and other expenses such as rehabilitation, childcare and housekeeping; and

• clear some or all of your debts.

Total and Permanent Disability: 

can provide a lump sum payment if you suffer a total and permanent disability and are unable to work again. This money could be used to:

• clear your debts; and

• cover medical and rehabilitation expenses.

Life insurance:

can provide a lump sum payment in the event of your death. This money could be used to:

• clear your debts

• enable your family to meet their ongoing living expenses and maintain their lifestyle

• cover other expenses such as childcare and housekeeping; and

• treat your beneficiaries equitably.

Seek advice

As we move through our lives, our insurance needs often change, so it makes sense to speak to a financial adviser to find the best option for you and your family. A financial adviser can work with you to understand your wealth and lifestyle goals and put a plan in place to help you reach them.

Speak to a financial adviser today, or call 1800 111 171 to chat to a specialist now.

¹ Calculations based on data from the Institute of Actuaries of Australia 2000. Interim Report of the Disability Committee. IA Aust: Sydney.