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A three stage money guide to help you negotiate the divorce process and create a secure financial future for yourself and your kids.

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Real Money Advice for Families

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Real Money Advice for Kids

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The Three Pillars of Personal Insurance

Wilson Luna

We believe that there are three covers that no family should be without and we call these the Three Pillars of Personal Insurance. Each Pillar plays a role in supporting your family, and while most people are familiar with the ‘big two’ that we’ve already discussed in the articles above, the role of income protection is often forgotten. If you’re wondering if income protection insurance is for you, read on!

• Income protection insurance replaces a proportion of your current income if you are unable to work – you can claim for everything from a broken leg that puts you out of action for a couple of months to a serious illness or accident that takes you out of the game for the long-term.

• Unlike trauma insurance, income protection insurance doesn’t go into specifics about which illnesses and injuries are covered and which are not – you’re covered for everything, giving you extra flexibility and protection.

• You might think that your employee entitlements will be enough, but sick leave and paid annual leave run out eventually, and worker’s compensation won’t cover you for everything – in fact, 90 per cent of income protection insurance claims paid would be ineligible for worker’s compensation.

• If you work more than 25 hours a week you should consider having income protection – in most cases a policy will replace up to 75 per cent of your gross income if you need to make a claim.

• Avoid ‘accident only’ covers at all costs – although they seem like a cheaper alternative, they are too restrictive and, in our opinion, almost totally useless. Your income protection insurance should replace your income if you’re unable to work, regardless of whether it’s due to accident or illness.

• Your policy needs to be ‘guaranteed renewable’ – which means that your insurer cannot refuse to renew your policy if you’ve made a claim.

Our final word of advice applies to all insurance policies – deal only with a reputable insurance broker. Naturally, there’s a lot more to know about income protection insurance and dealing with a reputable broker will ensure that your personal insurance covers do what you need them to, when you need them to.

If you liked this article you might also be interested in these other articles about personal insurance:

Expect the unexpected - understanding the essentials of personal insurance

The two-minute guide to disability insurance

Want more? Take a look at the rest of our articles on personal insurance covers.

Tags: personal insurance covers, personal insurance, insurance covers

Author's Biography

Wilson Luna is an author, wealth adviser and founder of Your Family Your Money. Your Family Your Money’s goal is to simplify traditionally complex financial strategies, demystify financial jargon and debunk common financial myths, becoming every family’s first stop for financial advice, information and inspiration