Posted on 09/01/2019
Insurance can be a complicated and pricey business.
Over-insure, and you might feel like you’re wasting your hard-earned money, but if you under-insure the results could be far costlier.
Just as your work, income and living arrangements change over time, so too will your insurance needs.
But what do these changes look like? And what cover should you be investing in at different life stages? Let’s break it down.
Under 25s: Investigate your options
There are a lot of firsts at this stage of your life. First car. First job. And possibly even your first home. Most under 25s, however, will have less financial responsibilities than older Aussies. You might be living at home or studying, and insurance could be the furthest thing from your mind. However, you should still consider your insurance options. For example, you may no longer be eligible for cover through your parents’ health insurance, and it is therefore important to investigate your own.
Your 20s and 30s: Plan for the future
This can be a great life stage for planning ahead. Chances are you’re earning a higher wage and moving up the ladder in your career, but ensuring you have the right insurance in place is an important part of your planning. If you’re thinking about starting a family, remember that most health funds have a 12 month waiting period for maternity cover. Be sure to examine the lifetime health cover loading and the impact this could have on your finances if you do forego private health insurance.
You should also consider the Death insurance and other income protection options that are available within, and outside, your super fund. These include Income Protection insurance, Death (also called Life) insurance, and Total & Permanent Disablement insurance. Ratings agency Canstar says that while Death and TPD insurance is likely to be cheaper and more manageable through your super fund, you should confirm that your level of cover is sufficient for your individual needs.
Families: Protect your loved ones
Once you have children, life is not only about planning for the future, but also about protecting your family in the event that something happens to you or your partner. As Lisa Palmer, our Head of Financial Planning puts it, “If a child, a spouse or a life partner depends on you and your income, you need to consider Death insurance.” While you may have cover through your super fund, it’s worth investigating whether this cover is sufficient. Most funds will let you increase your level of cover, but you should take into account the impact this will have on your retirement savings. One option is to increase your super contributions to offset the cost of insurance and reduce the chance that your super retirement will take a hit. Lisa suggests you speak with your Financial Planner or super fund for more details.
It is also important to weigh up whether you require Income Protection. Ask yourself what would happen if you or your partner couldn’t work due to temporary disability or illness? Would you have enough money to maintain your family’s quality of life? Income Protection cover options are available both inside and outside your super fund. ASIC has great resources that provide further information on your insurance options through super.
Older Australians: Planning for Retirement and Beyond
Once your children are grown, planning for your retirement is likely front of mind. With most Death insurance policies in super ending when you reach a certain age (usually 65 or 70), it’s worth re-examining your options, even if you have good levels of cover.
Statewide Super offers a range of insurance options including Income Protection, Death and Total & Permanent Disablement cover. Members can chat to an adviser about their insurance arrangements through their Statewide Super account, simply by calling 1300 65 18 65, with the initial appointment at no additional cost.