We should all have the standard insurance –
home insurance, contents insurance, car insurance. Why?
Because for a lot of people who own their own home,
or are paying it off, the home is there largest financial
asset. Not only that, but if you lost your home, where
would you live?
There are other insurances that we may not have thought
so much about:
- Life Insurance
- Income protection insurance
The hardest thing I’ve found here, is getting
the other half to prioritise this. My sister has said
the same thing. Talking about death and potentially
debilitating diseases and the impact on your family
does not make for the most positive of conversations.
But if you make it business like, structured and sensible,
it just becomes another task to do.
Basic idea to Life Insurance
If one partner dies, would the other be able to continue
to live in the current house, afford the current lifestyle?
If the main income earner dies, or is unable to work,
it would hit you financially as well as emotionally.
Insurance can help ease that burden. My view is you
should aim to be insured for an amount that will pay
off the mortgage, and leave some additional money to
help the remaining partner get through the first few
months. Ultimately you might still have to sell your
home and go back into the full time work force but you
will have some time to decide what is best.
For the stay at home partner, insurance is important
too. If you were not there, the remaining partner would
have to decide whether to stay home with the kids, part
time or full time, or whether to get a nanny. There
may be other practical things they are not used to,
such as cooking, cleaning, which again you might want
to pay for.
If you have a superannuation fund, there is usually
an option for Life Insurance included. It can be as
simple as filling out the paper work, but if you are
looking for a higher amount, some companies will require
a health check with the doctor. A hassle, but not a
bad thing to get a clean bill of health once in a while.
If you don't have an option with your super, most of
the financial organisations such as AMP or the big banks
will sell life insurance policies, as do some of the
insurance agencies you might you for your house of car,
such as GIO. An independent financial planner would
be able to provide comparison quotes. To find some recommended
Income Protection Insurance
Income Protection Insurance ensures you have continuing
income in you are unable to work due to illness or disability
for a short period or on a more permanent basis. It
does not protect against redundancy.
This is especially important if you are dependent on
one key income earner.
As with Life Insurance, there may be an option with
you superannuation to take out Income Protection Insurance,
but you can also get a policy from other financial organisations.