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Getting your insurance cover right

Now you know why insurance is so important, the next step is deciding what level and type of cover you need. Let's run through some things to keep in mind.

Finding your insurance sweet spot

It can take days – and a whole lot of stress – to figure out what type of insurance cover is best for you and how much of it you need. And the thought of making a decision that could have a major impact on your life down the track can feel daunting. The good news is, we’ve got some great pointers from our very own IOOF insurance expert, Peter Stathis. 

The ‘what does your gut tell you' test: sleeping easy at night

Numbers certainly have their place in calculating the right level of insurance cover – but it’s also about how much of a safety net you’re willing to pay for and what cover is going to help you sleep well at night. Thinking about these questions – and whether you’re likely to lose sleep over the answers – can be a good starting point when thinking about the insurance you need:

  • Is someone relying on me to pay the mortgage?
  • How long would my savings last if I Iost my income?
  • How would I cope having medical treatment whilst having to work?
  • Will this insurance give me more peace of mind?

What type of cover do I need?

In our last topic on why you need insurance and your options we gave you the lowdown on different types of cover. When deciding on the cover you need, it’s worth keeping in mind the pros and cons of these options.  

With trauma cover, for example, a claim payout means you’ll have a lump sum to help you meet the costs of medical treatment when your life is interrupted by a serious illness. Income protection, on the other hand, will pay you a set amount each month when you’re unable to work due to illness or injury and there may be a waiting period before you start getting your payments. 

Both types of cover could definitely help if you were to have a brush with cancer or a stroke that’s serious but not life-threatening.

And if it’s a condition that leaves you unable to work or care for yourself for the rest of your life, then you may be eligible for a claim payout on a Total and Permanent Disablement (TPD) policy.  

Taking out every type of policy is one way to make sure you’ve got the cover you need if the worst were to happen.  But this ‘cover all bases’ approach might cost more than you can afford. So how do you choose a combination of policies and premiums that adds up for you?

It’s all about you

The type and level of insurance cover that’s right for you, very much depends on your situation. There is no automatic answer or cookie cutter approach to getting it right for you. This is why working with a financial adviser can be a great way to choose insurance cover that suits your circumstances. They can take your personal situation into account and use their expert knowledge to make recommendations that are a good fit.   

"Getting covered for a year's worth of your salary can be a good starting point. Knowing you've got 12 months of income to see you through a period of illness can do a lot for your finances and peace of mind. 

But when illness strikes there may be more to it than getting regular payments to help cover your regular expenses. That's why expert advice can be so important in helping you decide whether Income Protection or Trauma cover - or both - are the best choice for your circumstances."


Things to keep in mind

If you’re taking a DIY approach to narrowing down your options, these are some of the critical factors that are going to influence what’s best for you:

You and your circumstances

  • Your work, age and partnership status
  • The number and age of any dependants
  • Whether you’re a renter or home owner
  • How much you owe on your home loan (if you have one)

Your expenses and debts

  • Your total monthly living expenses
  • How much you owe in loans and debts (apart from your main mortgage)

Your income and assets

  • Your annual income – and your partner’s income if applicable
  • Any additional income you or your partner earn
  • Any assets you have – including cash, property and investments

A good rule of thumb for your level of cover

You probably don’t have a seven-figure salary or a $10 million dollar property you’re paying off. Getting enough cover to give you some peace of mind and a bit of breathing space if your health takes a turn for the worse may be enough.

Cover calculator: running the numbers

If you’re thinking “this all sounds great, but I need a more exact answer”, our Cover Calculator can help. Whether you’re considering TPD cover, Income Protection or Death cover – or all of the above – this handy tool is designed to help you work out the amount of cover that might be right for you. 

Use the IOOF Cover Calculator

Our calculator doesn’t cover Trauma insurance. If you’re considering this kind of cover and need some help working it all out, a financial adviser can help.

If you’ve got questions about your insurance cover or your cover needs, you can speak to our team who can help to point you in the right direction

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