When we think about financial planning, we often focus on budgeting, investing, and saving for retirement. But what about protecting the very income that allows us to build those savings in the first place?
Life and income protection insurance are essential components of a well-rounded financial plan, helping you and your loved ones maintain financial security in the face of unexpected events such as illness, injury, or death. These insurances act as a financial safety net—yet they are often misunderstood, undervalued, or overlooked altogether.
This is where your financial adviser becomes an invaluable asset. Navigating the complexities of insurance products, understanding your risks, and selecting cover that aligns with your lifestyle and goals is not something most people can or should do alone.
Why Life and Income Insurance Matter
Life insurance provides a lump sum payment to your beneficiaries if you die or are diagnosed with a terminal illness. It can help pay off debts such as a mortgage, cover funeral expenses, and support your family’s ongoing living costs. Without it, your loved ones could face financial hardship at an already emotionally devastating time.
Income protection insurance, on the other hand, replaces a portion of your income (usually up to 70%) if you’re unable to work due to illness or injury. With the cost of living on the rise and many households relying on dual incomes, even a few months without earnings can cause severe financial strain.
In both cases, these insurances aren’t about enriching your family or yourself—they’re about preserving financial stability when life doesn’t go according to plan.
Why Financial Advice is Essential
Life and income insurance policies vary widely in terms of what they cover, how much they pay out, waiting and benefit periods, exclusions, and premium structures. It’s not just a matter of buying a policy—it’s about buying the right policy.
A licensed financial adviser will:
- Assess your unique needs – taking into account your income, debts, family structure, lifestyle, and long-term goals.
- Compare providers and products – going beyond headline features to understand fine print and ensure value for money.
- Explain terms in plain language – so you truly understand what you’re buying.
- Structure your policies effectively – including whether to hold insurance inside or outside superannuation.
- Review and update your cover – as your circumstances and needs evolve over time.
In short, they help you avoid underinsurance, overinsurance, or worse, paying premiums for a policy that won’t pay out when needed.
Top 10 Questions to Ask Your Adviser
To ensure you’re getting the best advice tailored to your situation, here are the top 10 questions you should ask your financial adviser when discussing life and income protection insurance:
- What types of insurance do I need, and why?
Understand the rationale behind each recommended type of cover. - How much cover do I need?
This will depend on your income, debts, dependants, and lifestyle goals. - How long should my income protection benefit period be?
Benefit periods can range from 2 years to age 65—each with cost and coverage implications. - What’s the ideal waiting period for my income protection policy?
The waiting period affects your premiums and when payments begin. - Should I hold insurance inside or outside of superannuation?
Each option has tax, cash flow, and estate planning consequences. - What’s covered—and what’s not?
Get clear on exclusions and conditions, especially for pre-existing medical issues or specific occupations. - How do stepped versus level premiums affect me long term?
Understand the trade-offs between cheaper premiums now and cost stability over time. - What happens if my circumstances change—can I adjust my cover?
Flexibility matters, especially if your family, income, or debts change. - How financially stable is the insurer?
Your adviser should be recommending reputable, financially secure providers. - How often will we review my insurance strategy?
Ongoing reviews help ensure your insurance remains relevant as your life evolves.
Final Thoughts
Life and income protection insurance aren’t just products—they’re promises. They promise security for your family, peace of mind for you, and resilience in the face of adversity. But they’re only effective when properly structured, regularly reviewed, and tailored to your unique needs. That’s why the guidance of a trusted financial adviser is not just helpful—it’s critical.
Whether you’re just starting your financial journey or are well established, now is the time to ask the right questions and make sure you’re truly protected. After all, a strong financial foundation isn’t built solely on what you earn, but also on what you preserve.
If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.
This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.
