Did you know that only 5% of Australians with dependants have adequate levels of Life Insurance cover. When you think about this in combination with the ABS statistics of more than 3 out of 4 Australians will be diagnosed with a serious illness during their working life, understanding your own personal risk insurance situation is vital to ensure both you and your family are adequately protected in the event of a serious illness or tragedy.
At Fornaro Financial Group we work with our clients to identify and understand the risks that they could be exposed to and recommend an appropriate risk management strategy. After all, there is no point creating wealth if it can all be taken away from you through no fault of your own.
Important questions to ask
• Could you survive for more than 3 months if you were unable to work due to illness or injury?
• Could your family survive if you suffered a tragedy?
• Could your family afford the mortgage and to maintain their current lifestyle?
• In event of a serious illness, could you cover medical expenses and maintain your current standard of living while you are recovering?
There are four key types of Personal Risk Insurance, and the level of cover you require will depend entirely on your personal and financial situation.
Life insurance, also known as term life insurance, provides a cash lump sum in the event of death. Cover normally applies immediately to any cause of death with the exception of suicide occurring within the first 13 months. Premiums generally increase each year as you get older.
Total and permanent disability insurance (TPD) is usually an optional extra on a life insurance policy and covers against a permanent disability. The amount of cover you can buy is usually limited to the amount of life cover you have. A claim is usually paid as a lump sum.
Trauma or Critical Illness insurance provides a cash lump sum on the diagnosis of a medical condition. The number of conditions covered (benefits) varies widely, cheaper policies often offering fewer benefits. The most common claims under these policies are for cancer, heart attack, coronary bypass and stroke, although other conditions can be covered. The benefit is paid when diagnosis is confirmed – not if you die of the condition.
Income Protection insurance provides an income stream should you become unable to work due to an injury or sickness. Benefits are paid monthly, not as a lump sum. The amount of cover is restricted normally to 75% your gross salary.