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Insurance priorities for all ages

Insurance priorities for all ages

Here's a simple guide to stage-of-life insurance priorities.

A majority of Australians are underinsured according to the latest Underinsurance Research report by Rice Warner.

The report found the median level of life insurance for working-age Australians covered only 42% of the financial needs (to maintain their standard of living) of remaining family members.

Here's a simple guide to stage-of-life insurance priorities: 

Life stage - Early career

This can be a busy and social period, but if your adult children/grandchildren are unable to work for two or three months, perhaps due to an injury on the ski slopes or an illness, how will they pay the rent and phone bills or save for a house deposit?

Income protection, plus a choice of TPD or Trauma insurance (explained below) could be considered. A Commonwealth Financial Planner can help figure out exact levels of cover required.

  • Income protection - covers up to 75% of current income, subject to a waiting period. Premiums may be tax deductible
  • Total & permanent disability (TPD) - if you are permanently disabled and cannot work again the insurer pays a pre-agreed lump sum
  • Trauma insurance - if you are diagnosed with a particular life-threatening illness covered by the policy, the insurer pays a lump sum

Life stage - Family with young children

Priorities have shifted. Parents are making their way up the work ladder but there could be financial pressures including a mortgage, a second car and supporting the needs of young children.

What if they were suddenly unable to work, even for just a few months? What if an accident or illness meant they were no longer around to help care for their family? How would mortgage repayments, school fees and living costs be met?

Suggestions for this period include a selection from the previous three covers - Income protection, TPD and Trauma - as well as Life insurance.

  • Life insurance - pays beneficiaries a lump sum upon the insured’s death

Life stage - Mature couples and singles

You are reaching retirement and hopefully have a sense of financial comfort. But this is arguably the most important stage for your own personal insurance. Building a retirement fund, paying down a mortgage and supporting older children while facing statistically increasing health issues mixes great freedom with enormous responsibility.

Life insurance could be your priority. Also consider a mix of Income Protection, TPD or Trauma. If you’re self-employed, consider Business overheads cover, which looks after fixed operating expenses if you can’t work due to illness or injury.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Commonwealth Financial Planners are representatives of Commonwealth Financial Planning Pty Ltd ABN 65 003 900 169 AFSL 231139 a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 (the Bank). Simple Life is also issued by CMLA except the Bill Protection component which is issued by CIL. CIL and CMLA are wholly owned but non-guaranteed subsidiaries of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945. CommInsure is a registered business name of CIL and CMLA. This information has been prepared without considering your objectives, financial situation or needs. Before acting on this, please consider its appropriateness to your circumstances. Product disclosure statements are available online, from any Commonwealth Bank branch or by calling 13 2423 for Home and Car Insurance and 13 3982 for Simple Life, and should be considered before making any decision about these products. If you call 13 3982 for Simple Life, you may be speaking with customer service representatives from Aegon Insights Australia Pty Limited (“Aegon”) ABN 35 082 524 785 AFSL 236657. Aegon is authorised to issue Simple Life on behalf of CommInsure. The Commonwealth Bank of Australia does not guarantee the obligations or performance of CommInsure or Aegon or the products they offer.