How much insurance?

Our lives are filled with things that are important to us. Some, like our home, possessions, cars and jewellery, are easily valued. Others, like our family and our lifestyle, are not.

Obviously, you can't insure yourself for every eventuality, but you do need to work out which insurances are most relevant to you and what level of cover you need. As we are an experience team at Rate Detective we are in great position to advise you on what level of cover is appropriate for your individual circumstances. In many cases, your insurance needs will be related to your age and stage of life.

Insure your income

Many younger people with no debts or dependants may think that they don't need any insurance. But who is going to pay the rent and your living expenses if an unexpected illness or accident happens? One in three Australians are expected to be off work for more than three months during their working life due to illness or injury.

A CommInsure study further found that 51% of working Australians aged 25 to 49 years with a mortgage, have no income protection insurance. Income protection insurance can replace up to 75% of your employment income if you have an unexpected accident or illness. Fortunately, the cost of income protection is tax deductible and this has the effect of reducing the real cost of the premiums by up to 46.5%.

Home, marriage and children

Real Life Insurance needs kick in when you make emotional and financial commitments - buy a home, get married, have children. At the very least, you should probably have sufficient life cover to pay all your large debts and provide your family or other dependants with a lump sum that can be invested to replace lost earnings. And that includes both partners if you rely on two sources of income.

Many people insure the working spouse but forget about the non-working spouse. Getting the children ready for school or child care and collecting them at 3.30 pm can be very tricky for a working parent if the other partner is not there. Making sure you are covered for unexpected traumas is also important. And it's more common than you might imagine.

Based on ABS data, one in two Australians will suffer a medical trauma event during their working lives. Women are especially vulnerable from breast cancer, with one in eleven likely to be diagnosed. What's more, 24% of cases are in the 20 to 49 age group.

How much will it cost?

Life Insurance and Total and Permanent Disability (TPD) insurance may not be as expensive as you think. However, the cost does depend on your sex, age and medical history. For lesser amounts of cover, a Personal Statement is all that may be required, but in many cases you will need blood tests and medical examinations before your insurance is approved. This may seem daunting, but the tests and examinations are usually paid for by the insurance company. Consequently, the only cost to you is time, whereas the benefit could be a clean bill of health that puts your mind at rest.

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Published on March 3-th, 2008 in Insurance
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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