What is personal insurance?
The term 'personal insurance' refers to insurance policies you take out on yourself. It provides protection against events like sickness, injury and death that prevent you and your family from meeting your financial commitments and lifestyle requirements. This fact sheet outlines the most common forms of personal insurance:
- Life insurance;
- Total and permanent disability insurance;
- Trauma insurance, and
- Income protection.
It is important to understand that insurance does not remove the risk of something going wrong. It provides you and your family with protection, compensation and financial security if something does happen. Put simply, insurance helps you manage those unexpected events that may otherwise mean you have to:
- use your savings or investments;
- borrow money;
- ask family or friends or others for financial assistance;
- sell assets to pay outstanding debts and day-to-day living expenses; or
- find other ways to make ends meet.
Everybody's circumstances are different - however, insurance is important for everybody. Your need for insurance will change as you move through different stages of your life. The amount of insurance you require will be influenced by your how much you earn, the change in cost of living, your assets, your liabilities, if you are married or in a defacto relationship, and the number of dependants you have - all of which may change depending on your life stage.
While having insurance can give you peace of mind, it's not like a savings account. Insurance involves the payment of a premium in exchange for cover. You will only receive a benefit if you have a legitimate claim against the policy you have bought.
There are many types of insurance. The purpose of this fact sheet is to outline the most common forms of personal insurance. Unlike car and home contents insurance, which allow you to insure your belongings; personal insurance policies enable you to insure yourself, and your ongoing well being.