Insurance

When it comes to saving, most people look at putting something away each week or fortnight rather than looking at saving on regular expenditure. Saving on insurance is however a more complicated issue, but don’t let it daunt you.

A super option

Life insurance cover normally includes total permanent disablement insurance. The cheapest way of holding this is through super.

To find out if you have enough, there is an abundance of calculators on the worldwide web that will tell you if you have sufficient cover.

Most people discover that they are “grossly” underinsured, ipac’s John Dani warns, so be prepared.

If you have insufficient insurance, the first port of call is to your super fund to check what it has to offer.

Depending on the amount of insurance, you may need to undergo medical tests before cover can be finalised, Dani notes, but the good news for busy people is that an insurance company medical examiner will often come to your home or workplace to undertake the examination.

Secure your income

The other form of insurance Dani argues is essential is income protection insurance, which can sometimes be part of super or your employment package.

Income protection will protect you against not being able to work because of injury or illness – and, Dani warns, don’t think it can’t happen to you.

More than 60 per cent of Australians will be disabled for more than one month during their working life and more than 25 per cent for more than three months, a 1995 report of a government disability committee found. The first exercise is to check if you have cover and, if so, whether you have enough.

If you do have income protection insurance and it is insufficient for your needs, you should be able to go through the human resources department to top it up.

Otherwise you could contact providers directly, or through a comparison site, by going online, or you could visit an adviser to walk you through the paces.

The commission-free alternative

It will be worth checking how the adviser is paid for their work.

They typically earn handsome commissions, but if you prefer not to pay a trailing commission, it is possible to buy the insurance without fees embedded in the product.

Life insurance calculators:

MBF (www.mbf.com.au/LifeInsurance/UsefulTools/Self-assessmentcalculator)

NAB (www.nab.com.au/wps/wcm/connect/nab/nab/home/personal_finance/1/4/11),

AMP (www.amp.com.au/calculators/riskinsurance).