4G. Insurance

• Health Insurance – Private health insurance can help you pay hospital and medical costs not covered by Medicare. If you don’t have private health insurance, it can cost you a lot of money if something goes wrong and you undergo prolonged medical treatment.

For further information, see the Private Health Insurance Ombudsman or Government Australia website to explain the health care costs that private insurance may cover and that Medicare does not

• Life Insurance – Life insurance provides the financial means to preserve your way of life, or that of your family, in the event of an accident, serious illness or even death. It can provide financial support for serious accidents or medical conditions resulting in permanent injury or loss of life, sickness or temporary disability and unemployment.

For more information, see MoneySmart Life insurance

• Car Insurance – Car insurance provides different levels of cover for your car depending on your needs. The type of cover you take out will be determined by your budget, as insurance cost caries. Always consider what you require and what is most suitable for your needs.

For more information, see MoneySmart Car insurance

• Home and Contents Insurance – Home insurance (also called building insurance) covers the cost of rebuilding or repairing your home and helps protect you against things that are out of your control, such as damage from natural disasters like storms, floods, and bushfires. It is important to check whether your insurance covers the cost of temporary accommodation should your home become uninhabitable because of an insured event. Contents insurance covers your personal possessions in your home if they are damaged or lost. It can include furniture, clothes, computers, fridges, electrical equipment, tools, and jewellery.

For more information, see MoneySmart Home insurance

• Mobile phone, tablet & laptop insurance – Portable electronic devices are highly valuable but easy to damage, misplace or steal. Insurance can be a good way to offset the cost of repair or replacement. Before you take out insurance, read the exclusions, as some providers do not cover accidental loss or mechanical damage.

For more information, see MoneySmart Mobile phone, tablet & laptop insurance

• Pet insurance – Pet insurance usually only covers cats and dogs, but some insurers also cover other animals. Most policies limit what they will pay each year and for each condition. You will have to pay the difference if your vet bills exceed the policy limit.

For more information, see MoneySmart Pet insurance

Always research the insurance you need and the level of cover that suits you best. If you are unsure what is suitable, seek help from your insurer or an insurance professional.

• Life Insurance – Life Insurance is payable when you die or if you experience a terminal illness and you are expected not to live for more than 12 or 24 months. This type of insurance is available depending on the specific policy benefits of each policy.
• Total and Permanent Disability Insurance (TPD) – Total and Permanent Disability Insurance (TPD) is payable when events that prevent you from ever working again occur. These events may release a TPD payment.
• Trauma and Critical Illness Insurance – Trauma and Critical Illness Insurance is payable when events such as cancer, heart attack and stroke occur. These events may be covered, depending on your policy.

Typically, Life, TPD and Income Protection are often held within superannuation, so may not affect your day-to-day cash flow or budget. They may, however, impact your long-term superannuation balance. So it is important to ask an adviser about this before making a claim.

Trauma/ Critical Illness benefits are held and paid for outside of superannuation. These benefits are paid in a lump sum when a specific health event happens to the insured person. This money can then be used to pay for health treatments or to support you if you are not working.

It is very important to talk to a qualified and licensed adviser (with Australian Securities and Investment Commission (ASIC)) for more information on your own personal situation.

You can find more information on qualified and licensed advisers at Financial Advice Association Australia – Find a financial planner.

Things to be aware of when considering insurance:

• quotes for an insurance policy are free
• getting a quote should be easy and can be done over the phone or through the company’s website – you can do this anonymously
• get at least three quotes on policies you have researched and thoroughly understood before choosing one – read the exclusions
• you should think about:
  • how much will the policy cost you in total?
  • what can you claim for?
  • are there limits to what you can claim?
  • is your policy’s benefits worth what you will be paying for it?
  • be aware of the claim excess – this is the amount you must pay before the insurance company will pay the rest, so it must be factored into your long-term budgeting

Your insurer must inform you in writing of any changes to your policy. You must also keep your insurer informed of any changes or modifications to:

• Your personal details including your name, address, phone number, and email
• The items you have insured, such as car modifications and renovation

If you are unsure whether you need to notify your insurer of the change or modification, contact your insurer directly, and they will advise.

If something happens that is covered by insurance, you must contact your insurer promptly. For guidance on what to think about before making a claim, see the Insurance Council of Australia

You can contest decisions made by your insurer if you believe it’s wrong. You should try to negotiate with your insurer first. If negotiation fails, contact the Financial Services Ombudsman or look up the FOS website for advice and assistance.

• always check who is insured to drive your car and what excess applies before you let someone else drive it – if you are the policyholder, you are responsible for any excess if someone else has an accident while driving your vehicle
• if you separate, remember to cancel any direct debits or other payments for assets you no longer have access to – for example, your former partner’s car
• if your insurance policies were signed with your former partner, you can’t remove their name from the policy
• in the event of financial hardship, talk to your insurance provider as they may be able to pause your payments – if you do this, make sure you understand what the impact of this is on your insurance cover
• it is only your responsibility to pay the excess amount if you are the policyholder – for example, if there is an insured event in your rental accommodation, you are not responsible for the excess even if you are living at the property at the time of the event
• This glossary is useful to help you understand common insurance terms