Nothing is as important as your family. So it's worth asking how they would cope if you were suddenly unable to care for them. Getting the right insurance cover could be more affordable than you think.

If you have a young family who relies on you, it's important to ask how they'd cope if you were struck down by a sudden accident or illness.

Without you and the financial security you provide, your loved ones could struggle to cover everyday expenses like rent or mortgage payments, school fees, power and water bills, even groceries. A sudden loss of income could mean selling the family home and radically changing the lifestyle you’ve worked so hard to build.

And risk protection isn’t just for families. With no second income to fall back on, singles can find it just as hard when an illness or injury stops them working, even for a short time. That’s why everyone needs to think carefully about insurance.

Do you have enough cover?

Unfortunately, the risks are real. Research from the University of Canberra’s National Centre for Social and Economic Modelling (NATSEM) has found that one in five Australian families will be affected by the death of a working age parent, or a serious accident or illness that leaves a parent unable to work.[1]

NATSEM calculates that a typical family in that situation could end up losing more than half its income. Yet they also report that only 4% of Australian families with dependent children have enough insurance cover.

You may think you are already covered through your superannuation — and it’s true that insurance through super can be very cost-effective, allowing you to effectively pay your premiums from your pre-tax contributions. But insurance through super is often one-size-fits all, making it important to check that the automatic level of cover provided by your super fund is enough for you and your family.

And, while most super funds offer life insurance (payable on death or permanent disability), they may not include other types of cover, such as income protection or critical illness, which could prove essential to protecting your family and your lifestyle.

Here’s a quick guide to some of the most commonly used risk protection options.

Life and Total and Permanent Disability (TPD) Insurance

Life and TPD cover gives your family a tax free payout if you die, become permanently disabled or are diagnosed with a terminal illness. That can help them pay off debts and stay on top of everyday expenses while they get their lives back on track, or help you manage the extra costs of living with a disability.

With enough cover, it can even create a nest egg for your family’s future. And if you take out cover while you’re young and healthy, Life and TPD cover can be surprisingly affordable.

Source:

[1] The NATSEM/Lifewise Underinsurance Report, National Centre for Social and Economic Modelling, Feb 2010.