Expect the unexpected: protect your assets

Here are the insurances you need to think about if you want to protect your assets.

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Nothing in life is certain, and this is especially true for your finances, which is why you need to protect your assets.

No matter how much you save or plan, sometimes things go awry.

But there are steps you can take now to minimise the financial damage as much as possible.

Your wealth, health and family are intertwined. So when things go haywire in one area, the others are impacted as well.

If you neglect to safeguard all three areas, your future prosperity is compromised.

Protect your wealth.

When you’re focused on building your savings, protecting your wealth is often an afterthought.

But if something unexpected happens, all your hard work and assets can go down the drain.

It’s important you set up wealth protection mechanisms now to save yourself financial headaches in the future.

Get income protection.

Your income is your most valuable asset.

Most people insure their homes, yet fail to insure the highest income earner in the house.

If you borrow to buy a home and invest, you cannot ignore income protection.

It is usually covered under your name and the premium is tax deductible.

Insurance companies often cover you for 75 per cent of your gross income.

Life insurance and total permanent disability (TPD) insurance. 

Life insurance protects your family if something happens to you as an income earner.

TPD insurance covers you if you have an accident and can no longer work.

These insurances are usually covered by your superannuation fund.

Get trauma insurance. 

If detected early, you could survive a serious illness such as a heart attack or cancer.

However, would you be able to survive financially after paying the medical bills and taking unpaid leave from work?

Trauma insurance usually covers medical bills and the 25 per cent shortfall not covered by income protection insurance.

Trauma premium is not tax deductible, but the payout is free if claimed.

Keep your debt level under control.

Don’t borrow more than you can repay.

Most people borrow the maximum the bank is willing to give them.

However, the bank’s method of calculating what you can afford is based on a formula that changes depending on whether the economy is running under a tight or easy monetary policy.

You need to work out how much debt you can comfortably tolerate, rather than jump at the maximum the bank offers you.

Protect your health.

What is wealth without health?

And how much will poor health cost you in the long run?

How many times have you worked overtime, skipped meals and exercise, opted for unhealthy foods, or missed important family events in the pursuit of earning more money?

It’s easy to lose sight of what is truly important to us when we want to achieve our financial goals.

Your financial success depends on your mental health and physical wellbeing.

If you continually ignore your health, you risk physical or mental meltdown.

Make your health a priority.

Exercise every day.

Eat well, drink plenty of water and make time for family and friends.

You’ll have more energy, be happier and save on medical bills in the long run.

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