Insurance
It’s more common to consult a broker service when seeking home loans or business loans. However, insurance is also crucial in one’s financial health because it protects assets and manages liabilities.
Yes, the topic can be quite intimidating and sombre, but it is a necessary goal for Australians. Right now, only 1 in 4 have life insurance, as the cost becomes prohibitive for many. However, it’s an important coverage for everyone, as it can prevent financial stress when unexpected circumstances arrive.
This article discusses insurance, what types of insurance are the most crucial for Aussies, and what difference can professional broking insurance providers give clients.
Life Insurance
What is life insurance?
Life insurance is one of the most common types of policies by providers. It provides a lump sum payment to your beneficiaries in the event of your death or a terminal illness. Life insurance is designed to keep your loved ones financially protected in your passing.
Depending on the insurer and the policy, the lump sum payment can cover living expenses and bills like a mortgage. As the policyholder, you are the one who decides to whom the financial payout will be given. It could be a family member, a non-relative, a trust, or an organisation.
In Australia, term life insurance, commonly referred to as death cover, comes in three primary forms:
- Direct Life Insurance: This category encompasses life insurance policies that individuals purchase directly from an insurer, typically through their website or over the phone.
- Advised Life Insurance: Advised life insurance is exclusively available through intermediaries, such as specialized financial advisers. It necessitates guidance from a financial expert during the purchase process.
- Life Insurance Within Super: Life insurance within superannuation involves the payment of insurance premiums as part of the fees levied by your superannuation fund. Many super funds automatically provide this coverage to eligible members. While this form of life insurance can offer convenience and affordability, it may also have drawbacks, such as the potential to reduce your retirement savings.
Bear in mind that in addition to or as part of their life insurance policies, many life insurers also offer:
- Income protection insurance – involves the insurer paying you a percentage of your pre-tax income if you become unable to work for a period due to illness or injury. Like life insurance, income protection can be purchased either directly, through an adviser or within super.
- Total and permanent disability (TPD) insurance – this pays you a lump sum of money if you become disabled and unable to ever work again, either in your current job or in any occupation, depending on the insurer.
- Trauma insurance (also known as critical illness insurance or recovery insurance) – this product pays you a lump sum if you suffer a significant injury or illness such as cancer, a stroke, or a head injury.
Getting life insurance can be time-consuming, as you must navigate so many options. Intellichoice can make the choice easier by comparing products and features from insurance providers. We can advise about setting up your insurance through super, choosing which premium and coverage is the best, and more.
Should I place my life insurance through my super?
Most super funds will automatically provide life cover and TPD insurance. Some also provide income protection insurance, which is under a specified amount and is available without medical checks. Under the law, super funds will cancel insurance if the account hasn’t received contributions for 16 months consecutively. There are also specific rules in super accounts that require cancellation of insurance if the balance becomes too low.
The average life insurance policies inside the super are $250,000 on average. This is a significant amount, but loan experts note that with the average mortgage being close to $450,000, the life insurance payout may not be able to cover it, let alone other family expenses.
What’s more, most TPD insurance cover ends by age 65, and then life cover concludes by age 70. Outside of super, insurance coverage is more flexible, with the expiry age up to 99 or being unspecified at all, as long as you keep paying the premiums. This is something to consider as you may have needs beyond the age limit that the super allows.
If you have any questions about insurance through super, we can help. Our team assesses and manages your risks to achieve the most beneficial package for your needs.
Home and Contents Insurance
What is home and contents insurance?
Home and contents insurance is a type of cover meant to answer the cost of repairs or materials replacement for your home. It protects homeowners if the property becomes damaged, destroyed, or the home contents stolen.
In Australia, around 60% of Aussies protect their residential property – the equivalent of 11.8 million individuals. Clients can choose the level of coverage and the type of cover (e.g., fire, theft) that the insurance specifies.
While insurance policies outline specific “insured events” that qualify for coverage, not all situations are covered, and there may be constraints and exceptions. Some risks may be part of a standard policy, while others can be added as optional coverage. The extent of coverage also hinges on whether you have building-only insurance, contents-only insurance, or a combined policy.
Building-only insurance typically covers risks like:
· Fire
· Storm
· Earthquake
· Explosion
· Impact damage
· Escape of water
· Vandalism and riots
· Legal liability
· Temporary accommodation (if the home becomes uninhabitable due to an insured
event)
In other instances, additional cover may include flood damage, accidental property damage, or animal-caused damage.
Meanwhile, content insurance covers the home’s contents, or your valuable possessions against similar risks. There are also coverage for theft, damage to home contents while in transit, and damage to valuables owned by guests.
Before purchasing a policy, it’s crucial to determine your needs. After all, paying premiums for different types of insurance could cut a huge chunk to your monthly budget.
How do I find the best home insurance deals?
Latest surveys show that as many as 63% of Aussie customers say their premiums have gone up in the past 12 months. If you are after the best deals, it pays to review your home and contents insurance every year to scout for better rates.
Even with millions of clients maintaining home insurance, it’s not so common to jump from one insurance provider to another – only 11% of clients do.
But experts found that insurance companies typically offer favourable deals to new customers when they sign up online. Discounts could be as much as 30% for new clients, so it absolutely is advantageous to shop around each year. Getting a better deal brings as much as $1,000 savings on home insurance.
If you want to keep your current insurance, you may call the insurer and ask for a price-match. It may not always give you a lower rate, but it’s worth inquiring about especially if they have competitors that offer lower deals.
Do I really need home insurance?
In most cases, if you are purchasing a home and not renting, you will need home insurance. Think of it this way: you are buying a home, which is one, if not the most significant financial expense in your life. Doesn’t it warrant protecting that asset? Lenders also won’t approve mortgage applications without adequate home insurance coverage.
Before choosing a policy, it’s crucial to thoroughly review the Product Disclosure Statement (PDS) or consult with your insurer to gain a clear understanding of what your policy covers, what it excludes, and whether any limitations or waiting periods apply. This ensures that you make an informed decision about your insurance coverage.
Let our insurance brokers address your custom insurance needs and research the market for the best deals. Talk to us today!
Owner Builder Insurance
What is owner builder insurance?
Owner builder insurance is a type of construction insurance designed for owner builder. It covers damages in an owner builder project. This product protects from fires, wind and water damage, vandalism, theft, and public liability.
Owner builders are individuals who get the certification to construct or do major renovations on their own residential land and are not otherwise employed as a builder. As they assume all the responsibilities (and associated risks) in an owner builder project, having a good insurance coverage means being cushioned against anything that could affect the completion of your home.
Construction insurance offers valuable financial safeguarding against an array of potential risks that confront owner builders. These risks encompass:
· Malicious damage or vandalism to the construction project or property.
· Theft of goods or materials essential for the project.
· Fire damage, which can be particularly devastating.
· Storms, wind, and water damage, which are not uncommon during construction.
In the event of any of these insured occurrences, the insurer commits to paying up to the complete replacement cost as indicated on your policy schedule. Additionally, most insurance providers extend coverage to encompass various supplementary expenses when such events unfold. These can include:
· Debris removal to clear the construction site.
· Demolition and disposal of the damaged building works or any pre-existing structures.
· Demolition and elimination of undamaged segments of the project that need removal to facilitate reinstatement or repairs.
· Professional fees, which are often associated with project assessments and related processes.
Owner builders need comprehensive coverage to ensure that they can proceed with construction projects with greater peace of mind, knowing that potential setbacks are financially mitigated.
Can I apply for owner builder insurance with an ongoing project?
Unfortunately, this insurance may not be available if you have already started the build. Insurance companies want to assess the construction details first before approving a specific policy. Hence, it’s best to secure one before applying for owner builder financing. Without the proper insurance in place, it may be difficult to borrow the funds you need.
Our insurance brokers help protect your owner build. We source the right policy to cover your needs and will guide you through the application process. A building site presents many hazards and risks that should be minimised as much as possible – our team can help you complete the project without any financial consequences relating to public liability or natural damage.
Car Insurance
What is car insurance?
Car insurance is a type of policy that covers cost of repairs or replacement in the event that your car gets damaged or stolen. It also provides liability coverage if you’re involved in an accident that causes injury or damage to other people and their property.
Car insurance is a legal requirement in Australia, which means every car owner must have the Compulsory Third Party (CTP) insurance. This is the minimum coverage level for every type of vehicle. For a broader coverage, there’s the Comprehensive Motor Car Insurance. Policies can vary depending on your budget, the level or coverage, and any custom options.
How do car insurance types compare?
Comprehensive Car Insurance – This type of car insurance offers the highest level of coverage. It not only covers damage to your own vehicle but also provides protection for other people’s vehicles and property. Having a comprehensive insurance will cover you in various scenarios, including hail, fire, storms, theft, or vandalism damage. It can also help with expenses like key replacements and provide a rental car if yours is stolen, among other benefits.
Third-Party, Fire and Theft Car Insurance – This level of coverage is designed to protect you if you damage someone else’s vehicle or property. It can also cover the costs of repairing or replacing your car if it’s damaged by fire or stolen. However, it’s essential to note that this type of insurance does not extend to covering damage to your own vehicle resulting from accidents, storms, or floods.
Third-Party Property Car Insurance – Third-party property insurance exclusively covers expenses related to damage you may cause to someone else’s vehicle or property. It does not provide financial assistance for repairing your own car.
Compulsory Third Party – Often referred to as Green Slip insurance, compulsory third-party insurance is a legal requirement for all registered drivers in Australia. In many states, the cost is included in your car registration fees. This insurance primarily covers compensation costs, such as hospital expenses, in cases where you cause injury or death to someone in a car accident. But remember, compulsory third-party insurance does not extend coverage to your vehicle or another person’s vehicle.
Talk to us about insurance
Insurance keeps you and your loved ones protected from unexpected events. With Intellichoice, you can easily compare and access the best coverage and rates. With our insurance brokerage service, you no longer have to go through tedious application and claims process. Your life and work won’t be interrupted. Book an online consultation with us today to find out your options.
