Protecting yourself through Superannuation and the 4 types of life insurance

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In this segment Helen explains tips number 3 and 4 of her 5 top tips for creating a strong financial foundation.

Transcription

Announcer: It’s that time on Wednesday evening where I get all excited because we talk to the lovely Helen Baker from On Your Own Two Feet. She’s our finance expert, she’s been giving us some tips, just to get on top of things.

Last week, Helen, we talked about getting an emergency fund together and doing our saving and expenditure plan, not a budget, it’s not called a budget, things like that. You’ve got some more tips for us this week, haven’t you Helen?

Helen: Sure have.

Announcer: Okay, so what would your next tip be?

Helen: The third one we look at is around superannuation. And it’s kind of linked with tip number 4 which links in with insurance. So things that we need to do obviously to protect ourselves if things go wrong, and that can often be on the health side of things, for ourselves or even for our partners. And the thing that’s in superannuation is you have the ability to pay things such as life insurance, total impairment disablement insurance, even some income protection insurance. That can be paid from your superannuation fund. The benefit of that sometimes, is rather than paying it from your cash flow, which might be a little bit tight, this allows you to get the coverage that you need when cash flow is tight and then you can always top up the superannuation later.

And the other thing with superannuation is that often people have more than one fund because they worked at different places and we pick up a fund here, there, and everywhere, so sometimes we can actually be doubling, the combination of all those insurances. But it’s really important that you don’t shut down those superannuation funds until you get advised because if you shut down one of those superannuation funds that has insurance in it, and once you shut it down it’s gone, so you need to make sure what you need to have in place is already in place and then maybe you can shut some of those other things down and bring it back to balance of fund fees and know where everything is, which is the other thing. Because people forget where they’ve got funds.

Announcer: And trying to keep track of that can be a whole other job on top of itself can’t it?

Helen: Definitely.

Announcer: Brilliant, so you said this one ties in with the next one, next one’s all about insurances, what would you say with that?

Helen: Yeah, so the 4 different types of personal insurances are:

1. Life insurance
2. Total and permanent disablement
3. Income protection
4. Trauma

… so a lot of people haven’t heard about trauma insurance, but trauma insurance covers for nasty situations and it pays a lump sum that you’re insured for, and it could be for $50,000 or something and that will help out with medical bills as well as finances. The issues you have is if I’m the one that gets sick, it’s very likely someone has to be with me and take care of me but they can’t because they are bringing the finances in.

And the other thing that’s good is that you can insure your children under that one and it’s really only like $5 a month for some kinds of coverage and then if something happens to the child, then you can have the time off work to be with them because you’ve got a payment there, or you can get them the best medical health that you can get, which is really important to most parents as well.

Announcer: I never even knew that and I’ve never even thought about that, but that is so practical.

Helen: Yeah, and the nice little tip, trick for that, is sometimes the grandparents who usually put money away for their grand kids, they might just want to pay for that premium to help the parents who might have other needs for their cash flow, and they can just pay that for them.

Announcer: Great, right, going to talk to the in-laws about that, writing that one down. Thank you very much, Helen. It is always a pleasure to speak to you, you just say things so simply and I always go away with lots, thanks so much for catching up with us, we look forward to catching up with you next week.

Helen: You’re welcome. See you soon, bye!