Protecting your family from financial hardship

Covering your loved ones

ACTIVITY

Trying to make sense of which insurance policies are relevant to you, what they’re for and whether or not you really need them is hard enough when you are single and only need to worry about one individual. 

But just when you thought insurance couldn’t get anymore complicated, throw a few dependants into the mix and you’ll find that the number of insurance policies that are applicable to you — and the level of depth to each type of policy — becomes almost endless. 

So, if you already have a family or if you are thinking about starting one, here is a list of some of the main insurance policies that may be worth considering to protect both their financial and physical health. 

Health insurance

The benefits of health insurance may not seem all that pertinent when you are the only person who will make use of them. When you have children, though, and you factor in all the injuries (broken bones, sports injuries, etc.), common illnesses and vaccinations that are part and parcel of childhood, the out-of-pocket costs without health insurance can really add up. And, heaven forbid, something more serious happens, health care costs can become astronomical. So, it’s worth investigating a health insurance policy for your family that will include all the basics and extras that are most relevant to your situation.

Health insurance is also a big consideration if you’re planning on starting a family and you would like to use the services of a private obstetrician and give birth in a private hospital. Most standard policies don’t cover pregnancy and birth-related services, so this is an extra you’ll need to add to your policy even before you start trying to get pregnant to ensure you aren’t felled by the typical 12-month waiting period for obstetric services. 

Trauma insurance

Trauma insurance is designed to provide a lump-sum payment if you suffer a potentially life-threatening medical condition — things like some types of cancer, strokes and heart attacks are commonly covered — but are not actually permanently disabled or terminally ill.

Trauma insurance can be purchased on its own or as part of a life insurance policy, and you can choose from different types of trauma cover to ensure you have a policy in place that is going to be specific to your needs.  

Income protection insurance

The purpose of income protection insurance is to ensure you continue to earn income if you are unable to work for a period of time — usually as a result of injury, illness or disablement. Some policies will even cover you if you are made redundant.

While income protection insurance won’t cover your full income, it will cover up to 75 per cent of your gross wages (usually in the form of a monthly payment) for a specific time period of your choice after you serve a waiting period (which can be anything between 14 days and two years).

TPD insurance

Total and permanent disablement insurance will pay out a lump sum in the event you become totally and permanently disabled as a result of injury or illness and are able to work again.

Some TPD policies will make partial payments in the event you are partially disabled, and some will also cover you if you are able to work in another occupation but aren’t able to work in your own occupation again.

TPD insurance can be purchased as a stand-alone policy or as an extension of an income protection or life insurance policy.

Life insurance

Of all the morbid insurance policies we’ve just discussed, life insurance is the most morbid. It’s not pleasant to think about, but life insurance is designed to pay a lump sum to the loved ones listed on your policy in the event of you being diagnosed with a terminal illness or in the event of your death. Some life insurance policies will also include funeral cover.  

The idea of life insurance, as well as the other policies listed above, is to ensure your family is protected financially should anything happen to you. While insurance can’t protect against emotional turmoil, it can at least provide some financial peace of mind to those you love the most by ensuring that they will be able to afford the ongoing costs of living — mortgage or rent, school fees, debts, etc. — if you aren’t able to continue to provide for them.


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