Do the Risks of Insurance Outweigh the Benefits?
Paying insurance premiums year after year without making a claim can seem like a huge waste of money. However, if managed wisely, insurance can be a valuable asset in your long-term financial strategy: by guarding against severe financial disadvantage if your circumstances change beyond your control. Choosing the right level of insurance can be a balancing act. Essentially, the more assets you acquire, the more insurance you will need. Due to this fact, insurance needs to be constantly re-evaluated to ensure it’s as effective as possible.
Home and Contents Insurance
The family home outstrips the value of most other purchases the majority of people make; by a large margin. Depending on your cover, home and contents insurance can fully repair or replace your house in the event of fire, storm or theft. Depending on where you live, the benefits of home and contents insurance are self-explanatory. However, despite this, 83% of Australian homes are under-insured. It’s certainly worth taking the time to work out if you want to pay for a total replacement insurance cover or sum-insured cover when you insure your home and contents. Total replacement insurance cover covers the entire home to the standard it was in the event of disaster, while sum-insured cover covers the value of the home to a fixed amount.
Compulsory third-party insurance (CPT) is compulsory for every vehicle registered in Australia. It covers personal injury claims made against you by other drivers, passengers, pedestrians, cyclists, motorcyclists and ride-along passengers involved in an accident.
You may choose to add comprehensive cover if a car is your primary vehicle and its damage or loss would affect your ability to work or care for your family. In addition to this, you may seek out comprehensive cover if you don’t think you are able to afford to pay for the cost of damages to other cars in the event you are responsible for an accident.
Life Insurance and Income Protection Insurance
Underestimating the losses associated with losing your primary source of income is a terrible mistake. 95% of Australian families have inadequate life insurance. This means that in the event even one partner is injured and unable to work the total family income is reduced to 50% or less. Life insurance or death and disability insurance are non-compulsory in Australia, however, most superannuation funds include them by default. Similarly, income protection insurance is often offered by superannuation providers to ensure that you still receive income in the event you lose your job due to circumstances beyond your control.
Contact Pillar Financial
Call our friendly team on 1300 730 309 or reach out via our contact page to ask what we can do for you as you plan insurance cover to protect you and your family.