There are things in life you don’t want until you need and insurance is certainly one of them. A critical tool to wealth creation and preservation in certain circumstances, join us this week as we have a look into all things insurance:

Life Insurance

Although it may be bleak, an important one to think about is life insurance and what happens when you die. Host Andrew Baxter notes that the willingness to pay the money for life insurance can vary significantly across different ages and lifestyles. Those who are young and single may look at life insurance very differently to someone with a family who wants to ensure their spouse and children are well looked after should they die. The issues to look out for in most cases come down to underinsurance and overinsurance. Underinsurance refers to when your policy may cover debts or other costs like that, but not provide any excess for those left behind for a bit of added security. Overinsurance comes about when you have a life insurance policy larger than what is necessary. The impact this can have is that it is an expense and over time paying those premiums will have an effect on your financial standing along the way.

Total and Permanent Disability

Total and Permanent Disability (TPD) insurance is another important one to ensure you and your family can survive financially should something terrible happen. Host Andrew Baxter explains that TPD insurance exists to cover you should an injury or disability arise which prevents you from working and earning the income you may have been before the injury. More often than not, TPD pertains to physically involved jobs and can be important if your line of work is dangerous. TPD also varies based on whether your coverage is for if you are unable to continue working in your current line of work as well as if you are unable to function in any line of work whatsoever. Sustaining some sort of injury or condition which makes you go blind is an example of an instance where you may be rendered unable to function in any job. Overall, it’s an important consideration for your financial position and keep in mind it is often tax deductible in an SMSF.

Income Protection

Income protection is another insurance that can be tax deductible in some instances. Host Andrew Baxter explains that it typically works by allowing you to claim up to 70% of your previous income paid in monthly installments. These installments can also potentially continue into perpetuity in some cases. This is a solid amount of income to continue coming in given income protection kicks in generally due to illness, whether it be mental illness or some sort of physical ailment. In a specialized area, certain niche occurrences can prevent you from working and if you are at a high income level this can be crushing if you are not properly insured. 

Structure and Advice

Among all of these topics, the structuring around them is arguably the most important part of the process. Likewise, ensuring you are receiving good advice on how to get set up in a way that is beneficial to you as well as your family is greatly important. We have covered in many different episodes the importance of good structuring as well as seeking out great advice and once again in this episode the same is true. If something happens that affects your income and can impact your lifestyle as well as potentially your family’s, you will look back and be glad you seeked advice surrounding insurance and got it set up right with the help of a professional.