Personal Insurance

AJM Financial Planning Pty Ltd

Protect yourself against uncertainty

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The most important asset you have is your health. In the unfortunate event of your death or you suffering a disability or critical illness, would you and your loved ones be taken care of?

By taking out adequate personal insurance, you can have peace of mind knowing that whatever happens, you and your family will be protected.

The main types of Personal Insurance are:

1. Life Insurance

Life insurance can provide a lump sum in the unfortunate event of your death. Policy proceeds can be used to settle debts and outstanding loans, medical and funeral expenses, estate settlement costs and various other costs. Proceeds can also be used to provide financial security for surviving loved ones and to pay for future expenses such as housekeeping and education funding.

2. Total & Permanent Disablement (TPD) Insurance

Total and Permanent Disablement Insurance can provide a lump sum if you suffer a total and permanent disability and are unable to work again. Policy proceeds can be used to settle debts and outstanding loans, medical expenses and the cost of converting an existing home or relocating to a more suitable one. Policy proceeds can also be used to provide financial security both for loved ones and for yourself, and to pay for future expenses such as housekeeping, nursing and education funding.

3. Critical Illness Insurance or Trauma Cover

Critical Illness or Trauma Insurance can provide a lump sum if you suffer a specific critical illness or trauma. The most common critical illness events are heart attack, stroke and cancer although most policies cover a range of additional conditions such as blindness, deafness, loss of speech, loss of limbs, dementia, chronic kidney or liver failure, various types of heart surgery, meningitis, severe burns, paralysis, multiple sclerosis, motor neurone disease, muscular dystrophy and Parkinson’s disease (to name just a few). Policy proceeds can be used to cover out of pocket medical expenses, to settle or reduce debts and outstanding loans and to provide an income until you are able to return to work.

4. Income Protection

Income Protection Insurance can provide a monthly benefit of up to 75% of your pre-disability income if you are temporarily or permanently unable to work due to disability. Unlike Critical Illness Insurance, which is payable if you suffer a specific critical illness or trauma, Income Protection does not look at the underlying cause of the disability but more at the effect of the disability, i.e. whether or not you are able to work. Income Protection Insurance can cover you both inside and outside the workplace and benefit payment periods can range from as short as one year to up to age 70. Where you are only partially disabled and can work part-time, a partial benefit may be payable. Income Protection Insurance is absolutely vital for both employed and especially self-employed individuals who would not be able to fund their living expenses should they be unable to work for any length of time.

Keeping the roof over your head: Susie’s story

Personal Insurance can protect your income against critical illness, trauma or disablement

In early 2009 I met up with Susie, a good client of mine, to review her personal insurances as she had recently started up her own business.

Susie was particularly concerned about what would happen if she couldn’t work, especially with regards to funding her ongoing living expenses and mortgage payments. Having reviewed her situation, I recommended that, amongst other things, she implement the maximum possible amount of Income Protection to enable her to maintain her standard of living as much as possible if she were unable to perform her usual occupation.

Thankfully Susie accepted my recommendation as only 9 months later she was diagnosed with cancer and was unable work. The Income Protection which we had implemented earlier that year paid her a monthly benefit without which she would not have been able to meet her various expenses. The knowledge that she would be paid a monthly benefit for as long as she was unable to work meant that Susie could concentrate on getting better rather than worrying about how she was going to keep the roof over her head.

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