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Personal Finance

Insurance Types You Should Consider Getting

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Insurance types in Australia

With the high cost of living in many Australian cities, the distressing reality is that the average Australian is just one emergency away from an empty bank account. 

And, let’s face it, no one wants to be at the receiving end of an exorbitant bill. Unfortunately, accidents can and do happen, pushing this financial nightmare into reality for several Australians and their families.

Fortunately, there are a vast number of insurance policies aimed to help Australians remain financially secure from these damages. From comprehensive car insurance to home insurance, Australians can remain shielded from a long list of fees by having these safeguards in place.

If you want to go through life with financial peace of mind, it’s important to consider getting various insurance policies to protect you. Listed below are nine insurance plans that Australian citizens can and should get to protect themselves.

Let’s jump right into it!

Car Insurance

Unless your primary means of transportation is public transportation, then it’s essential to get car insurance for your vehicle.

In Australia, car insurance is legally mandated. It’s typically attached to your vehicle registration fee as a green slip. This type of insurance is formally referred to as Compulsory Third Party Insurance (CTP).

This insurance covers personal liability costs if you have caused damage to another person or property. The coverage extends to both medical and legal costs, up to the rate agreement.

Australian drivers can also opt for an optional comprehensive car insurance package. These add-ons can provide coverage for damages caused by attempted theft, natural disasters, and other catastrophes that may damage the vehicle.

Health Insurance

Another important insurance type to consider is health insurance. This type covers hospital bills and other health-related expenses. 

There are two main types of health insurance: hospital stay coverage and general treatment. For instance, if you’re staying for a couple of days in a hospital bed, health insurance can provide some cover for the length of the stay.

General treatment can also be covered by health insurance policies. Specifically, dental, physiology and optical treatment are some types of procedures that can have insurance claims.

There are some things health insurance can’t protect, though. For example, this insurance policy may not cover GP visits, unprescribed X-ray scans, and unprescribed blood tests.

Many health insurance policies provide cover for both general treatment and hospital stays. But just to be sure, talk with your private hospital insurance provider to see the extent of their coverage

Total and Permanent Disability Insurance

Another insurance policy Australians should consider getting is TPD insurance. This insurance policy provides a lump-sum payment if you become totally and permanently disabled due to injury or illness.

This insurance provides coverage for people permanently injured both inside and outside of a work setting. The coverage comes in the form of a lump-sum payout, which can be used to cover family living expenses, medical costs, and savings for retirement. 

To claim a payout, you’ll need to have submitted an application and have it approved by the relevant insurer. Once they have assessed that you are indeed totally and permanently disabled, the payout will then be given out according to the contract terms.

That said, you’ll still have to make a tax payout after claiming the lump sum from the TPD insurance. Curo’s TPD Tax Calculator can help you accurately calculate your net payout and taxes.

Home and Contents Insurance

Another top insurance for Australians is a home and contents insurance plan. This insurance policy covers the cost of damages to your property and other personal belongings.

In early 2020 in New South Wales, over 3,500 homes were destroyed because of bushfires and wildfires. La Nina on the eastern coast of the country can also be particularly brutal, with more than 20,000 homes getting affected by severe damage caused by floods during 2023.

If your area is susceptible to flood, drought, bushfires, and wildfires, then having this insurance plan in place can help cover the cost of damages caused by these aforementioned natural disasters.

No one will know for certain when tragedy will strike. As such, it’s a good idea to get a H&C insurance plan to protect you when things go sideways.

This insurance policy covers damages to the house structure—a category known as building insurance. 

This includes the driveways, fixtures, garage, and fences. It also covers personal belongings inside the house (a category known as contents insurance), like your carpets, electric appliances, clothing, shoes, and furniture.

Besides natural disasters, an H&C insurance policy also insures for events like theft, fires, pipe damage, impact damage, vandalism, and accidental glass breakage. That said, be sure to communicate with your insurance provider to know the full extent of the coverage.

Furthermore, when claiming an insurance payout, be sure to calculate for taxes. The cost of content damage under $10,000 is not taxable according to the ATO, but personal asset damage above $10,000 is taxable. 

Life Insurance

Life insurance covers the costs associated with accidents, medical complications, natural causes, terminal illness, and acts of violence resulting in death.

This insurance is helpful to provide families and dependents financial assistance in case of a breadwinner’s untimely death. The payout comes in a lump-sum payment.

The payout of life insurance is relative to the price of the annual premiums. For people paying a higher-than-average monthly premium, the payout of an untimely death will accordingly increase.

Life insurance supports family financial needs like debt, funeral expenses, and future milestones like college tuition and weddings. 

It’s good insurance to have since it helps give peace of mind knowing that your family is financially prepared in case you or your partner are no longer around. 

It may be a part of your superannuation fund, so be sure to make necessary reviews to know if it has ample coverage or not.

Income Protection Insurance

For employed individuals and freelancers, particularly those without sick leave benefits, having income protection insurance is critical to help financially support you in case you can’t work because of illness or injury.

This insurance covers up to 75% of your pre-tax salary while you recover, which can help cover daily expenses like food, rent, and utilities.

If you’re supporting a family or have dependents, this insurance plan helps preserve your financial safety net and standard of living even if you’re not working.

Trauma Insurance

When you combine parts of life insurance and income protection insurance, you get trauma insurance. Specifically, this type of insurance provides a lump-sum payment to insurance holders who are diagnosed with a grave illness, such as a heart attack or cancer.

The trauma insurance policy typically specifies the types of illnesses that would qualify the policyholder for a lump sum payment. 

When a diagnosis has been confirmed, the insurance policyholder can use the insurance payout to pay for medical treatments, home disability modifications, and income replacement. 

This policy is good for Australians as it can help add financial padding to your family when you’re not suffering from an illness and aren’t capable of working.

Business Insurance

No matter if you own a small enterprise or a large-scale company, having business insurance can help you cover for business-related damages. 

These damages include property damage, inventory damage, employee injury, customer injury, business owner injury, and loss of income.

In Australia, having basic business insurance is compulsory for entrepreneurs, but there are additional business insurance add-ons that can provide more comprehensive coverage. 

There are many types of insurance policies businesses can get. One essential one is workers’ compensation insurance. This protects you and your workers from accidents and illnesses.

Stock and product insurance provides coverage for inventory when it gets destroyed through natural disasters, stolen from third parties, or deteriorated and rendered useless. It also covers asset breakdowns.

Lastly, liability insurance helps provide coverage for when you’re liable for damages to another property or injuries to a third party. If the nature of your business is one where legal action risk is high, this insurance can be a massive help. 

For certain industries, it’s mandatory before you can legally operate. So be sure to review what insurance policies you need to get before operating.

Travel Insurance

If you find yourself constantly travelling overseas, travel insurance is great insurance to have. This coverage can help provide financial assistance for lost luggage, flight delays, and trip cancellations. The cost of goods or damages is covered by this insurance.

More crucially, travel insurance can also provide coverage for medical bills during travel. 

With many countries requiring patients to pay for hospitalization and medical bills out of pocket, this insurance policy helps ensure that you don’t have to withdraw from your savings in case of emergencies.

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