How to Protect Your Family, Lifestyle, and Wealth

When planning for your financial future, it’s important not just to focus on growing your wealth, but also protecting what you already have. One of the best ways to do this is through insurance, which is a risk management strategy. Simply put, insurance transfers the financial risk of certain events from you to an insurance company. If something happens, the insurer will compensate you, so you don’t have to bear the financial burden alone.

 Why Insurance Matters

Many Australians don’t have enough insurance, even though it can help reduce the financial stress when you or your family face sickness or injury. Let’s break down the main types of personal insurance:

1. Term Life Insurance:

This provides a lump sum payment to your family if you pass away or are diagnosed with a terminal illness. This money can help support your loved ones financially, giving them peace of mind during a difficult time that they can take the time they need to grieve without worrying about financial pressures.

2. Total and Permanent Disability Insurance (TPD):

TPD insurance gives you a lump sum if you become permanently disabled and can’t work again. It usually covers severe disabilities like losing a limb, sight, or being unable to perform everyday activities. Each insurer has different definitions of "permanently disabled," so it's important to check these carefully before choosing a policy.

3. Income Protection Insurance:

If you're unable to work due to sickness or injury, income protection insurance pays a portion of your income (usually up to 70%) until you're able to return to work. Payments are made monthly, and you can choose how long you’ll be paid for and how long you’ll need to wait before receiving payments. It’s especially helpful when you have ongoing bills like mortgage repayments, rent, or school fees.

4. Critical Illness (Trauma) Insurance:

This type of insurance pays a lump sum if you're diagnosed with a serious illness like cancer or have a major medical event like a stroke. The money can help cover medical bills, rehabilitation costs, or necessary changes to your home.

5. Child Cover:

No one wants to think about their child becoming seriously ill or injured, but if the worst happens, child cover can help ease the financial burden. This type of insurance can support your family so you can focus on your child’s recovery without worrying about costs.

How to Structure Your Insurance

It’s not just about choosing the right type of insurance; how you pay for it matters too. Some insurances, like Term Life, TPD, and Income Protection, can be paid through your superannuation fund. This can reduce the impact on your personal cash flow while still ensuring you're covered.

Income protection insurance paid for personally may also be tax-deductible, so it’s worth checking how it can help reduce your taxes.

Protect What Matters

To protect yourself and your loved ones, it’s a good idea to meet with a financial advisor who can help you understand your insurance options. Building your future is important, but protecting what you have now is just as critical.

General Advice Warning

This information is general and does not take into account your personal financial situation. Before acting on it, consider whether it is appropriate for your circumstances.

M&A Wealth

The information in this article has been provided courtesy of the Financial Advice team at M&A Wealth.

If finding the right level of insurances or reviewing your current insurances is of interest to you or you would like to explore further options on how to Build, Manage and Protect your wealth, visit www.mawealth.com.au or give the team a call on 1300 629 325 and they would be more than happy to assist you along your financial journey.