Personal Insurance Made Simple: What to know before you buy

When it comes to financial planning, personal insurance is one of those topics that’s easy to put off — until life reminds us why it’s so important.

Whether you’re protecting your income, your family, or your future, the right insurance can make all the difference when things don’t go to plan. But with so many options — life cover, TPD, income protection, trauma insurance — it can be hard to know where to start.

Here are some key things to consider before making decisions about your personal insurance cover.

What do you actually need to protect?

The first step is understanding what’s most important to you.

• If you have a partner or children who depend on your income, life and TPD insurance can help provide financial security if something happens to you.

• If you’re single but rely on your income to cover living expenses, income protection or trauma insurance might be more relevant.

The goal isn’t to have every type of insurance — it’s to have the right combination that fits your life stage, financial commitments, and goals.

How much cover is enough?

A common mistake is choosing cover amounts that sound right but don’t reflect real needs.

Think about:

• How much income your family would need if you couldn’t work.

• What debts or living expenses you’d want covered.

• Education costs or long-term plans you’d want protected.

It's really important to get the cover amount right and not just guess, or go for an arbitrary number that sounds like enough. If you are unsure, ask your financial adviser to help to calculate your needs. For most people who already have a mortgage and family, the sum insured will probably seem high initially, but should reduce as you pay off debt, build up investment assets and your children get closer to being independent.

Should you hold cover inside or outside super?

Some types of insurance can be held inside your super fund, which can make premiums more affordable. However, there are trade-offs to consider:

• Cover inside super is paid from your super balance, reducing long-term retirement savings.

• Certain definitions (especially for TPD or income protection) may be more limited within super.

• Claim payments from super can have different tax implications, especially for non-dependant beneficiaries.

It’s important to understand these differences before deciding where to hold your cover.

Review your policy definitions and waiting periods

Not all insurance policies are the same. The definitions of “total and permanent disability” or “income protection” vary between insurers and can make a significant difference at claim time.

Key details to review include:

• Benefit period: How long the policy will pay you if you can’t work.

• Waiting period: How long you must be unable to work before benefits start.

• Policy definitions: How “disability” or “occupation” is defined for your cover.

A small difference in wording can make a big difference as to whether a claim is accepted.

Keep your cover up to date

Your needs change as life changes. A new home, business, child, or career move can all affect how much cover you need — and what you can afford.

It’s good practice to review your insurance annually or whenever your circumstances change. That way, you’re always protected at the right level, without paying for cover you no longer need.

Get advice before making big decisions

Insurance isn’t just about protecting against what could go wrong — it’s about protecting your future and your peace of mind.

A financial adviser can help you:

• Compare policies and insurers.

• Structure cover tax-effectively.

• Make sure your policy will perform when you need it most.

Final Thoughts

Personal insurance is one of the most important — yet often overlooked — parts of a solid financial plan. It gives you the confidence to focus on living your life, knowing your family, income, and goals are protected. The last thing anyone wants is for their hard work to be derailed by illness.

If you’re unsure whether your current cover is right for you, or you’ve never had a full insurance review, I can help you understand your options and find the right balance between protection and affordability.