Personal risk insurance is crucial to protecting your lifestyle and the people who depend on you. How would your family cope if you were unable to work due to illness or injury? Could they cover expenses such as mortgage repayments and school fees? Personal risk insurance provides peace of mind that if the unexpected occurs, you and your family will be secure.
What is personal risk insurance?
Protecting yourself and your family financially is a necessity, not a luxury. Personal risk insurance protects your areas of financial vulnerability, such as mortgage, other debts, regular household expenses and, if you’re self employed, your business.
No one can eliminate the devastating emotional impact of serious illness, disability or death, but if you or your family have to deal with financial problems as well, the situation can be more difficult to manage. Having money available when you need it most is what makes insurance so valuable.
There are four main types of personal insurance:
- Life insurance: a cash lump sum payable on death to help support your dependants.
- Total and permanent disability (TPD) insurance: a cash lump sum to help support you and your dependants if you are totally and permanently disabled due to illness or injury.
- Income protection insurance: a monthly income stream to help support you and your dependants if you are sick or injured and can’t work.
- Trauma insurance: a cash lump sum to help support you and your dependants if you suffer a specified major medical condition.
The cost of premiums
The cost of personal insurance premiums is generally related to the level of risk associated with the insured event. This can include factors such as:
- your age
- the state of your health
- your occupation
- the type of recreational activities you participate in.
Other factors that may affect the cost of premiums are the type of benefit being paid and whether you have included extra benefits such as coverage for specific injuries, events or diseases on the policy.
Before taking out personal insurance, consider the policy features carefully because the exact circumstances in which a benefit is payable can vary. A cheaper premium may indicate more restrictive conditions on claiming, particularly with policies relating to payment on illness or injury.