Check your best assett - you - is insured

IF YOU own your home or an investment property there's a good chance you have it insured. But you have another asset that's worth a lot more than bricks and mortar. And that's you.

Most workers have some sort of life insurance through their super, yet research shows that Australia is one of the most underinsured nations in the developed world when it comes to personal insurances like life cover and income protection insurance.

According to industry body Lifewise, 83% of Australians say they have insurance for their car, but only 31% of us have income protection cover in place. When it comes to life insurance, one in two members of an industry super fund are estimated to be underinsured by about $100,000.

It means vast numbers of families are leaving their financial wellbeing to chance because if anything happens to you, the bills don't stop rolling in and your home loan still needs to be paid.

You can buy most personal insurances through your super, and the advantage here is that the premiums don't come directly from your own pocket. The important thing is to check you have cover in place - and that you have enough.

There are three main of types of personal insurance you can arrange through your super. The first - life insurance, will give your beneficiaries (usually your family) a lump sum payout or a series of regular payments if you die.

A second type of cover is 'total and permanent disability' insurance - or TPD. This will provide a payout if you become permanently disabled and can't work.

The third variety of cover available through your super is income protection insurance. This gives you a regular income, usually worth around 75% of your current wage or salary, if you can't work for a given period due to illness or injury.

All three varieties of cover can be purchased through the big insurance companies. However the premiums are often a lot cheaper when you take out a policy through your super. That's because the fund gets a bulk discount by taking out insurance for a large number of members.

If you aren't sure about whether you have personal insurance through your super, take a look through the fund's product disclosure statement. It will usually have details of the insurer and the cover available. Or check your last super fund statement, which should show a deduction for premiums.

To discover how much you're covered for just pick up the phone and ask your fund. If you don't think it's sufficient, enquire about ways to top up your insurance.

The availability of personal insurance is a good reason to roll any super balances you may have into your preferred fund. It's estimated that Australians have an average of three different super accounts to their name, often as a result of changing jobs.

By having more than one super fund you could be paying for insurance you don't know about or don't need. Use the Super Seeker database on the Tax Office website (www.ato.gov.au) to track down any super you may have forgotten about.

Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. Visit www.paulsmoney.com.au for more information.

Topics:  insurance, opinion, paul clitheroe



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