When there’s a change in your life (like a newborn, a new house, or a new job) that’s probably a good time to see if your insurance needs to change. Let’s walk you through some of the key things to consider to see if the policy you’re paying for through your super fund is the right fit for you.
One of the first things to think about is the amount of debt you’re carrying, and how much of that might be covered in the event of your death. The latest Australian Bureau of Statistics data (as at 2018) shows the average Australian household debt has grown by 79% in real terms from 2003/4 to 2015/16. This is largely because of borrowing to buy property. Of course credit card debt is a big factor too. In fact more households are burdened by credit card debt (55%) than a mortgage (34%).
According to a February 2018 report from Rice Warner, working Australians with life insurance have an average estimated cover amount of $344,500. For some mortgages that may be sufficient, but is it enough for you and your loved ones? It’s certainly worth looking into.
It’s not only premature death that families need to be covered for. How about protecting your income? Only a third of working individuals are currently insured for income protection (IP). Rice Warner recently estimated that 30 year old parents with children would probably need IP that covered 85% of family income and TPD cover equivalent to 4 times the family income.
While these figures could be appropriate to one family’s situation, they may be way over the top or completely inadequate for another family. It’s important that you identify your family’s current lifestyle and financial objectives, then analyse how this may be impacted in the event of death, disability or illness.
This analysis can expose a funding gap between what you need and what the insurance cover in your super can provide. Most insurance arrangements held within super are ‘default’ or ‘automatic’ covers that usually did not require the completion of medical questions or assessments. As a result, the level of cover provided under these default arrangements is very limited due to the greater risk involved of not identifying claimable medical risks upfront before providing cover to super fund members.
Are you ready to analyse your insurance needs? Your Elston adviser can step you through the process and provide you with options. Just give them a call.
If you’d like to get in touch with one of our advisers you can contact us at 1300 ELSTON or email firstname.lastname@example.org and an adviser will be in touch.