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Understanding personal insurance

Personal insurance covers the income source for your family, so it’s the most important insurance you can have.

With luck, you’ll never need it, but we’d rather you be safe than sorry. We offer an ideal solution.

What you need to know

Ask yourself, what are the four most important things in your life? From our experience, you’re likely to say:

  • family,
  • food on the table,
  • roof over your head,
  • and good health.

Now consider what you have covered by insurance. You can replace your car, your house and your contents.  But is the most important thing covered? Personal insurance covers the income source for your family.

We joke that if you are fully covered and ideally structured, Murphy’s Law says you will never need to claim which makes it the best money ever spent. But where we’ve assisted with a claim for a family in desperate times, it’s great to know that financial strain is one thing that the family won’t have to deal with. It shows the value of effective planning.

There are four main forms of personal insurance cover: life, total personal disability (TPD), income protection, and trauma insurance. Each can overlap slightly, none are generally suitable on their own, and each can be tax deductible if structured properly.

As with all insurance, you need to apply for cover before you need it. Most importantly, if you leave it until you or your family develop a condition, you may not get cover. There are many policies to choose from, but from our experience, if a policy is cheap then the chances are it has limited scenarios under which you will get paid out. For example, the two main TPD definitions either cover you if you can’t do your occupation or if you can’t do any occupation. An engineer in Karatha can still answer phones in Perth, but he wouldn’t be able to keep his kids in private school or cover his investment property costs. Which definition do you think he needs?

If you work in mining or oil and gas and your policy is more than a few years old, it’s probably more restrictive and expensive than what you can get now. Recent improvements in job categorising in these industries have opened up more options. Just because you work on site doesn’t mean you’re treated like a jumbo driver or deep-sea welder!

It pays to get advice, as what’s right for you won’t necessarily be right for your colleague.

Your options

You can:

  • Accept what you have and either get lucky or live with the regrets.
  • Call the companies advertised on TV or online which provide simple, expensive but immediate cover. Often these have limited terms and they generally verify your history when you claim, so they might accept your premium for years and then decide not to payout when you claim and they dig a little deeper!.
  • Go to an insurance broker who is usually paid by commission which means you will get cover but it may not be ideally structured from a tax and cashflow perspective.
  • Use your bank, which means you’ll get the bank’s insurance policy, which might not be the best fit for your needs.

The BWG Way

We’re not aligned to any one insurer and we can help you structure your insurance correctly using your current policies and super fund if appropriate or with replacement cover if needed.

For personal insurance advice, we offer:

  • A refreshingly effective service,
  • Big savings over the long term through intelligent structuring (for example, ask us about a little used feature called level premiums), and
  • Tax effective policy ownership given we specialise in tax management strategies.

Contact us

If you wish to discuss your insurance options, contact us.

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