The Most Undervalued Forms of Insurance
‘Insurance’ is a tricky word, isn’t it? For some of our assets, we see insurance as absolutely essential, like car insurance or home contents insurance. But for other areas of our lives, we often write insurance off as pointless or ‘nice to have’ but ultimately unnecessary, like income protection insurance or health insurance.
Income Protection Insurance
While most of us insure the tangible things in our lives, like homes, cars and other vehicles, we don’t usually think about insuring the means by which we can afford those things – our income. Your income is the most important aspect of maintaining your lifestyle. Without it, could you still afford your rent or mortgage? Your car repayments? Your bills and food? Income protection insurance is there in the event that you can’t work and will pay a certain percentage (usually 75%) of your income to make sure you stay afloat during difficult times.
In Australia, health insurance is mandatory for anyone earning over $70,000 a year, but those who are below this threshold or those who feel they are healthy often overlook health insurance. Health insurance is divided into two parts – hospital and extras. While some people may not need extras insurance, it’s still handy to have so that you don’t end up being out of pocket because of small medical issues, like going to the dentist. Hospital insurance is also undervalued – while it’s true that you might never need to go to hospital, hospital insurance is crucial in covering some of your expenses if you do. There’s nothing worse than being in hospital, being unable to work and then having to cover extensive hospital expenses too.
Even though we love to travel, we often don’t like to think about the things that might go wrong. From lost bags to failing health or deportation problems, travelling abroad can be risky. Yet many travellers often forego travel insurance. The Australian Department of Foreign Affairs and Trade handle over 20,000 cases a year and many of these people do not have insurance – resulting in long-term financial debt. While you will most probably have a safe trip, travel insurance can prevent you from having to sell your assets in order to cover any overseas expenses when you return home.
Life and Death Insurance
Life insurance is there to benefit your family in the event that you die. While all people with families and dependents should have life insurance (particularly if you’re the family’s breadwinner), there are those who don’t. If you die, for example, how are your children going to survive? If you have a dependent, who is going to look after them and afford their living expenses in the event of your death? Life insurance simply ensures that the people in your care are still cared for after you’re gone.
Rental Car Insurance
It’s great to rent a car, particularly when you’re on holiday – but if you think you don’t need insurance, think again! If you’re a good driver, you’re probably thinking that the odds of you getting into an accident are very low. But if you do get into an accident, do you have the funds to cover any damages? Some rental companies will offer insurance, however it’s a good idea to check the excess as well.
Professional Indemnity Insurance
While larger companies will almost always have insurance, if you’re starting your own business, it’s a good idea to get professional indemnity insurance. Professional indemnity insurance protects you against circumstances in which a customer or client finds you liable for a financial loss because of information or advice you provided to them. For instance, if you work in an asset management consultancy and your advice leads to operational losses for your client, your indemnity insurance will protect you from costly legal expenses and paying any compensation. Professional indemnity insurance is crucial for many professionals including financial advisors, accountants, architects, designers, nurses, real estate agents, auditors, consultants and more.