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Four insurance policies you must have

When an emergency hits you need all your focus to deal with it, so prepare your finances now.

As with most women, you are likely making a huge contribution to your household, well beyond a pay cheque. And this contribution should be recognised when it comes to your life insurance. 

On top of our day jobs, we’re often the primary carers for children and other relatives. Many households rely on us not just for our emotional strength and multi-tasking prowess, but also our financial contributions: you may be an equal contributor to household finances or the primary breadwinner for your family.

While women tend to be great savers and often have a pot of money accessible for emergencies, this money is unlikely to last over an extended period.

In these cases, the financial support provided by insurance can be really valuable. It can help you make the best decisions for your health and family’s wellbeing – without having to worry about money. 

What types of life insurance are there?

The most common types of life insurance you should consider are:

  

  • Life cover. This can help pay off debts and provide for your children’s ongoing needs if you die or are diagnosed with a terminal illness.
  • Total and permanent disability (TPD) cover. This can help you pay for your long-term medical costs if you can never work again due to an illness or accident.
  • Income protection. This can help you keep up with bills and household expenses by replacing a percentage of your income if you can’t work temporarily due to an illness or accident.
  • Trauma cover. This can help you pay for medical treatment or allow your partner to take time off work if you’re diagnosed with a serious medical condition (most commonly cancer).

How many of these do you need?

Each of these insurances cover you in different ways, so it’s common for one person to have all four types of cover (often packaged into one policy).

It’s also possible to claim on multiple cover types at once. For example:

  • If you are diagnosed with cancer, you could be eligible to receive a lump sum benefit under trauma cover.
  • If you’re unable to work for an extended period because you’re undergoing treatment, you may also be eligible to claim to receive a monthly benefit (usually a percentage of your income) under income protection.

Having these insurances in place can help you and your partner take care of the financial side of things so you can focus on getting better. 

What about the cover you have in super?

Life cover and TPD cover are often provided by your employer as part of your super. However, the amount of cover they give you is often not enough for all of your financial commitments. 

You are generally able to apply for a higher level of cover through your super, which can help you provide enough money for your debts and dependants.

The added benefit of buying insurance this way is that you can use your before-tax income (i.e. through employer or salary sacrifice super contributions) to pay for your premiums instead of your after-tax savings.

A good place to start is to see what insurance cover you have inside your super. Once you know what cover you already have, you can explore what additional cover you might need to protect yourself and your loved ones.

If you want a hand working out how much cover you need, or weighing up your cover options, you may want to talk to a financial planner.