What would you say is your most important financial asset? Is it your house, investments or maybe a trust?
Your most crucial asset is really your health. Without good health, your ability to earn a living is compromised – which is where risk insurance policies come into play. With insurance investment growing in Australia according to Roy Morgan Research, many people are seeing the benefits of managing health or life roadblocks properly. So, what type of risk insurance should contractors have?
1) Income protection
Assignments provide the bulk of most contractors income, but what happens if you’re unable to work due to an illness or injury? Having income protection means your insurer will pay you a percentage of your income if you can’t work. At the moment, based on Lifewise data, just 31 per cent of Australians who have car insurance also have income protection.
There are a couple of different parameters to keep in mind when considering an income protection policy. This includes how long the policy will pay out, how long you have to wait before receiving the benefit and how much of your regular income will be paid out.
2) Death cover
While we never want to think about passing away, it will eventually happen and having insurance in place for your family will be important. Death cover insurance is a policy where payment is made to support your family after your death.
This way they can concentrate on saying their goodbyes to you rather than worrying about their immediate financial situation.
3) Total and Permanent Disability Cover (TPD)
With a TPD policy, you can receive payment that enables you to continue to pay the bills.
Injury or illness can strike at any time. While the common cold might not put you out of work for long, other serious health conditions could. In the case that you become disabled and unable to work, how will you manage financially?
With a TPD policy, you can receive payment that enables you to continue to pay bills, support your family and live your life to the fullest.
4) Trauma cover
Similar to the policy above, trauma cover will support you through a defined serious illness or condition. For example, you might have been involved in an accident that will mean you’re off work for a number of months. In this case, you still have access to money to keep your financials ticking over and your family supported.