7 Insurances To Consider To Protect Your Finances

Life is full of ups and downs, and while some bear nice and memorable experiences, others can upend your current living situation and negatively affect your future.

Naturally, it should be your goal to minimise the impact of these down moments every chance you get. While we can’t prevent every single bad thing life throws our way, we can take preemptive action in case they do arise. 

One way to financially protect yourself is by securing an insurance policy.

An insurance policy serves as a safety net to help keep your finances secure in case of emergencies. There are different categories of insurance policies you can obtain, and each has its own specific coverage and claim methods. 

No single insurance policy can cover the entire breadth of financial emergencies—this is why it’s highly recommended that you get multiple coverage options to be adequately protected.

This begs the question: What insurance policies should you get to protect your finances?

This article will list just that! Here are seven types of insurance you can consider to safeguard your money.

Income Protection Insurance

If you’re unable to work due to a sudden sickness or injury, you can claim a payout under the income protection insurance scheme. 

This insurance provides monthly payments in compensation for lost wages until you’re physically and mentally capable of returning to paid work or if you retire.

It’s vital to note that this insurance doesn’t substitute for the entirety of your salary before your illness or injury. It’s typical for you to receive about two-thirds of your earnings before tax. 

Typically, the coverage pays the most during the first six months of claiming, and it trickles down to a slightly lower payment value for a specified time after six months. 

Furthermore, the income you get from this policy is tax-free, so you don’t have to worry about dealing with tax reports when you claim.

This insurance is ideal for employees who don’t have income protection insurance covered under their employment contract or their super fund. It’s also ideal for entrepreneurs and self-employed individuals who don’t have access to income protection due to the nature of their work. 

People with dependents or with big debt obligations like mortgages can also greatly benefit from this insurance plan. Regardless of your profile, having this insurance policy is great to have to protect you in case you find yourself in accidents or are susceptible to illnesses.

Health Insurance

While Australia is renowned for its excellent healthcare policies, some hospital visits will require payments, especially if you’re expected to get surgery or stay for an extended period of time.

Having a robust health insurance policy helps you avoid facing a pile of bills in case you find yourself in a medical emergency. This insurance plan covers a wide range of hospital-related expenses, such as hospitalisation, emergency treatment, prescription medications, dental and vision checkups, and general appointments. 

This insurance doesn’t only help you reduce expenses on the spot, but it also allows you to receive timely medical attention, reducing the need for you to tighten your expenditures to save up for unexpected hospital visits.

The peace of mind you can get from owning a robust health insurance policy is priceless. This is especially true if you have dependents, as you won’t bring them along a massive debt cycle in case you fail to get adequate health insurance.

TPD Insurance

Another way to protect your finances is by owning a total and permanent disability (TPD) insurance plan. This insurance provides coverage for you and your family if you become totally or permanently disabled.

Totally and permanently aren’t just superlative adverbs; these terms refer to attributes that describe a complete, irreversible and permanent incapacity to work in any job function. When this happens, naturally, a person won’t find employment which can lead to a loss of income.

Unlike the income protection insurance plan, this plan pays out in a lump sum structure. This gives you immediate access to funds, allowing you to alleviate the stress of financial strain as soon as you gain access to the payout.

This can cover an entire breadth of disability and medical-related expenses, such as rehabilitation costs and medical expenses. It can also cover living expenses like mortgage payments and food costs.

TPD insurance is typically covered by your super fund. If you plan to claim a partial amount of it, you’ll need to pay a superannuation withdrawal tax fee for the lump-sum payment. 

This TPD tax calculator from Curo Financial Services can help you accurately pinpoint how much you have to pay in taxes from your claim.

Comprehensive Car Insurance

Do you own and drive a vehicle in Australia? If so, you’re legally required to own car insurance for it, specifically, compulsory third-party (CTP) insurance. 

This insurance protects your finances by covering personal liability caused by you to third-party individuals in a vehicular incident. This includes other drivers, their passengers, or random passers-by. In particular, it covers their medical expenses and hospitalisation bills.

That said, this car insurance doesn’t cover your injuries, your passenger’s injuries, and property damage that occurred during the incident. This is where comprehensive car insurance steps in.

This optional car insurance covers a wide range of unforeseen events that may cause damage to you and your vehicle. It can cover the repair and replacement fees, for instance, allowing you to financially stay afloat even if your car has sustained massive damage during a crash.

It also covers accidental damage to your car. This includes theft, vandalism, falling objects, flooding, fire, and damaging weather elements like hailstorms. 

Given that a car is one of the most expensive assets an ordinary individual can afford, getting comprehensive insurance for it can ensure that you’re financially safe from any sudden, adverse events.

Home and Contents Insurance

Speaking of expensive assets, your house most likely tops the list as one of your most expensive one. 

This is considering the fact that the median house price in Australia is teetering close to the seven-digit mark—and even higher if you only consider houses near major cities like Sydney and Melbourne.

There’s no question that you want to keep your property safe. And while you can definitely uphold safety practices for your home, remember, anything can happen—including fires, storms, and theft incidents that may ruin the structural integrity of your home and cost you thousands of dollars.

If you want to protect yourself from all these adverse outcomes, you should consider getting comprehensive home and contents insurance for your property and possessions. 

This insurance covers a partial or full amount of the financial extent of the damages, helping you maintain your savings without being overburdened by repair and maintenance costs.

This insurance covers not just your building, but also the furniture and possessions found inside your house. This includes your jewelry, kitchenware, and other valuable items that you may possess.

If you want to safeguard your items, be sure to get this type of insurance to have peace of mind knowing that the value of your home remains intact even in extreme situations.

Life Insurance

If you have family members or dependents, then it’s vital to have life insurance to provide financial security for them in the event that you pass away. 

A life insurance policy guarantees a lump-sum payout to your beneficiaries, covering funeral costs, existing debts, and other living expenses.

This type of insurance is typically only available for people aged 18-65, but some insurers may extend the policy to include people aged 75 in some cases.

Life insurance is a crucial tool to help your family remain financially afloat after your passing. There are also different types of policies available, particularly term life, all of life, and group life insurance.

Be sure to review each type and choose the one that best fits your individual circumstances.

Business Insurance

If you own a company, it’s vital to get business insurance to protect your company in case of lawsuits and unforeseen events.

There are multiple types of business insurance policies you can get in Austarlia. The most common ones you should have include:

• Workers’ compensation: Covers medical costs, wage replacement, injury, and death of employees.
• Professional liability insurance: Protects you against civil liability cases.
• Loss of income insurance: Replaces lost wages and gives you money at the end of the contract.
• Property insurance: Protects your building and its contents in case of adverse events.
• Business stock insurance: Covers inventory or merchandise in case it gets damaged, lost or stolen.
• Cybercrime insurance: Pays out your company in case it has been victimised by cyber attacks.

By getting ample business insurance, you can protect your business and set the foundation for it to grow and prosper with few risks.