Insurance. The Granny Knickers of Finance.
Now, we’d never go the full Bridget Jones. Promise! Just like insurance, granny knickers are not sexy and we don’t really want to spend our money on them, or think about why we need them. But every girl knows it’s worth having a pair of grannies in the drawer for those times when we need an extra bit of support, or peace of mind.
Think insurance is, well, negative? A bit of a Debbie Downer? You betcha. Worrying about what can go wrong AND paying for the privilege is a tough sell. And when things are going well, it’s even harder to cough up the cash to cover a seemingly far-fetched “what if?”. There are so many other things you have to fork out for, and so many other fun things that you’d much rather spend your hard-earned on than insurance.
All the feels with you on this! But there are some excellent reasons you should at least consider it. And we’re here to tell you…
Exactly why you should give a f**k about insurance
Ladies, it comes down to is this. Everything is awesome! Until it isn’t.
Of course, we were totally never going to …
• Break a leg skiing (though we did look fabulous après-ski)
• Get pregnant before we were ready
• Have an ongoing illness
• Lose our job
… until we did.
That’s the thing. Stuff happens. Life isn’t always what we planned. Let’s be honest, it usually isn’t. And sometimes things are just … not good. But you already know this.
Like a looser pair of jeans in the cupboard, food in the freezer, beer in the fridge, and Mum on speed dial, insurance is the backup plan for when things go awry.
The low down
We know it’s hard paying for something you can’t see, don’t think you’ll need, and often don’t understand. It sucks. But if (when) something goes wrong, it will suck more if you can’t fund what’s needed to get you through it. And frankly, knowing that you have some protection is going to help you sleep better at night.
Convinced, or at least curious to learn more? Okay. Let’s take a look at the different types of insurance. It won’t take long. We’ll be quicker than McDonald’s Drive Thru, and so much better for you.
These are the most common types of insurance (outside the obvious ones like home and contents, medical and car insurance). It’s only a start, but it will help you understand the different types on offer.
Income Protection
Income protection insurance pays part of your income if you’re unable to work due to an accident or sudden illness. It can help pay the bills, your mortgage and support any dependants so you can focus on getting better. You’re able to insure for up to 85% of your pre-tax income for an agreed period.
A good income protection policy should cover you up to at least the age of 67 when most people will be able to access their super savings. You can also take out extra cover to ensure money is being paid into your superannuation fund while you’re unable to work. It’s an awesome opportunity, and a lot of people aren’t aware of it. Money going into your super is taxed less and will grow over time due to compounding, so it’s worth considering.
Some people rely on insurance in their super, which can be okay. But you should take the time to check out the inclusions because many of the insurance policies in super funds have short benefit periods and can also have long waiting periods to access the cash. You might be paying for something which isn’t going to cover your specific needs , so it’s important to check out the details.
Total & Permanent Disability Cover (TPD)
We know, it sounds grim. Ugh! But it will be so much worse if a permanent disability impacts your ability to work or live the way you do today. Now, if you’re like most of us and think nothing awful like that will ever happen to you, tune into the Shameless podcast interview with Emma Carey – the 20-year-old plummeted to earth on her first sky diving trip. The point here is that bad stuff does happen. And you don’t have to be jumping out of a plane. Regardless, we think you’ll enjoy Emma’s tale of discovery and triumph and learn a few things on the way.
We don’t know if Emma had TPD. But if she did, she would’ve received a lump sum payment to help cover the costs of living with a disability and without a job. It’s about planning for things that you can’t plan for.
Aaaargggghhh it’s all so depressing!
Reading all the names of these insurance products, it’s obvious why insurance has a severe image problem. Maybe we should come up with some different names for them… we’re thinking…
Earn Without the Work (Income Protection)
Change of Course Cover (Total & Permanent Disability Cover)
Pearly Gates Financing (Life Insurance…Death Cover)
Not Just Soup & Sandwiches Cover (Critical Illness Cover)
Clearly this needs work. But we’re finance people not advertising execs! If you’ve got some better ideas let us know.
Life Insurance (Death Cover)
Now, you may be wondering what on earth you’re going to need money for if you’re dead. Better booze at the wake? Bribes to make sure you can get inside the pearly gates? No, no, no! It’s not for you, silly. It’s cash to leave to people, animals, causes… whatever or whoever you care about.
When you’re young, and you feel invincible it probably seems unnecessary to think about life insurance. In most circumstances, you’re probably right. It’s unlikely you’ll be dying any time soon, and you’re more likely to be worrying about how to pay for your lifestyle right now than worrying about someone else. But that’s the point of insurance – you just don’t know.
Now, everyone is different. And only you can know what’s going on in your life and heart, so it’s worth thinking about and getting some advice.
As you get older, this is even more true. You likely have more to leave behind (uh-huh, keep working, saving, and growing your wealth peeps). That includes not only your wealth but also people you care about; like your kids, a partner, your fave cause, or even a much-loved pet. Whatever your jam, if there is someone who relies on you financially, then life insurance is worth considering. It means you can rest in peace, knowing they have a sum of money coming.
Trauma Cover (Critical Illness or Recovery Insurance)
This is a type of insurance that covers you for things like cancer, a heart condition, a major head injury, or stroke. If you consider taking out Trauma Cover, be sure to check out the detail before you sign up because what’s covered and medical definitions vary a lot between insurers.
Now, if you’ve been paying attention, you might be wondering what the difference is between trauma insurance and TPD. Good question! The main difference is that TPD is only paid if you can never go back to work because of an injury or illness. Trauma covers you while you’re getting better. It covers you until you’re ready to swing back into action again.
You can learn more about these types of insurance, including tips on what to think about and some useful tools, on the Government’s MoneySmart site :
Income Protection Insurance
Total Permanent & Disability Insurance
Life Insurance
Trauma Insurance
So, what’s next?
First things first. Pop the kettle on and pour yourself a cuppa. Or have a good lie down because you deserve it after staying with us to the end. We know insurance is boring! Truly. But peace of mind is a beautiful thing.
Take the time to think about your lifestyle. Be honest with yourself (yes ladies, deep breath) and work out how much does it really costs. And then think through how much you’d need if something goes wrong.
After you think about it, do your research, and then we recommend seeking support from a qualified financial adviser or insurance specialist in your area.
Okay. You’ve got this! Play safe out there, friends.
General information only
hello@superfierce.com.au