I’ve got my mortgage sorted, so do I need insurance?
There are so many things you need to think about when you buy a home. Once the house hunting is over, there are building inspections to organise, loans to get approved, utilities to contact, it’s an endless list.
And in the rush to move in and set up your home, insurance is often overlooked.
Sure, you’ll need home insurance to cover your home and contents, but you also need to really consider taking out insurance so that if you fall ill, lose your job, become injured, your mortgage is covered.
So how much insurance do you need? A good rule of thumb is to ensure you that if you die, your debts are covered. This means that in the worst case scenario, your family and loved ones know that you have your money sorted.
Where do I start?
Firstly, you need to realise what your most important asset is. No, it’s not your house. It’s your ability to work and earn money.
OK, but then what?
Contact your Financial Planner and look at the insurance options that best suit you.
Income protection will probably be the first suggestion. This will often pay you a monthly benefit (75% of your pay ) if you are unable to work through sickness or injury. It’s tax deductible too and will mean that you can keep paying your mortgage and all the other bills until you can get back to work.
Remember, some insurance plans only cover your mortgage. Your Financial Planner can really help here and if you’re buying your first home, now is a good time to consider Income Protection insurance because you can lock in premiums at a rate that will stay affordable when you are older and more likely to make a claim.
Total Permanent Disablement is insurance that will pay you a lump sum if you suffer injury or sickness that prevents you from working again.
None of us want to think about this scenario but in the unforeseen circumstance that this happens, having this insurance means your mortgage and other costs can be covered.
Trauma insurance is another type of insurance your Financial Planner may suggest and this works by paying you a lump sum for a specific illness, like cancer, stroke or heart attack or in the event of catastrophic injury.
These sorts or lump sum can cover the mortgage for months, often years, until you are in a position to consider other options. It’s all about taking the financial pressure off at a time when there are many other stresses.
Got it, but how much do I need?
A Financial Planner will assess your current situation, income and outgoings and then make an expert recommendation, helping you understand the terms and conditions and which policy is just right for you.
It’s great advice, it won’t cost much and you will be set for life.
This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular circumstances and needs. Financial planning services are provided by Eastwoods Wealth Management Pty Ltd ABN 17 008 167 002 / AFSL 237853 trading as Beyond Bank Australia Wealth Management. Eastwoods Wealth Management Pty Ltd is a subsidiary of Community CPS Australia Ltd ABN 15 087 651 143 / AFSL 237 856 trading as Beyond Bank Australia.