When you’re young, it can be easy to think of life insurance as a nice-to-have. After all, you’re probably in good health and have more pressing expenses, right? Not quite.
All it takes is one accident or one diagnosis and everything can change - all of a sudden, insurance will become your top priority.
The only trouble is when you’re already hurt or sick, the ideal time to take out insurance has passed.
So we know insurance is important, but what are the different types of insurance you might need to start considering from a young age?
Life Insurance
Life Insurance can provide your loved ones with a lump sum payment that can help ensure their financial security in the event of your death, or if you are diagnosed with a terminal illness.
The thing about Life Insurance is that most people think it's just for, well, elderly people.
But that couldn't be further from the truth.
Life Insurance is important for people with young families, which is usually those aged in their 20s, 30s and 40s.
That's because if the worst were to occur to you, this policy can kick in and pay off debts that would otherwise have been a challenge for your partner or beneficiary to cover, such as mortgages, outstanding HECS debt, car loans, funeral and burial costs.
Income Protection Insurance
Income Protection can give you an alternative source of income if you’re temporarily unable to work due to an illness or injury that's left you totally or partially disabled.
Once again, Income Protection is a great fit for those aged between 20 and 50.
Why? Well, let's take a mortgage for example – probably the biggest debt you'll ever take on.
The average first home buyer in Australia is 34-years-old, and takes out a $336,500 loan, according to the Australian Bureau of Statistics.
It's critical that at this point in your life you have a back-up mortgage repayment plan in place should you become temporarily injured and unable to work.
Income Protection can deliver a steady stream of monthly payments to help keep your household up and running while you recover.
Total Permanent Disability (TPD) Insurance
TPD insurance can provide a lump sum payment if you become permanently disabled due to accident or illness, and are unable to work.
Now, it's commonly known that young adults – males in particular – are known to engage in more risky behaviour – whether that be playing footy, participating in adrenaline- pumping activities or simply in the tasks they undertake at work.
In fact, those aged between 25 and 55 make up more than two-thirds of all workplace injury claims, according to Safe Work Australia.
However, TPD insurance provides you with a financial safety net so you can go on making the most of your life should something unfortunate happen.
Critical Illness Insurance
Critical Illness Insurance can provide you and your family with financial freedom by paying out a lump sum if you become critically injured or ill.
Now, when you're young, the last thing you want is to be struck with a severe injury or illness and not have the time or money to concentrate on recovering.
And that's the beauty of Recovery Insurance.
It can provide you with a lump sum that’ll give you financial access to the best medical treatment available, allow you to cut back on your work hours, and give you every chance possible of rehabilitating from your serious injury.
How to get the ball rolling
Avoid the trap that so many fall into - the time to purchase insurance is before you need it, not after.
It’s also important to remember that your situation is constantly changing, so the type of insurance policies you took out five years ago might not be best for you now.
To ensure you’re best protected should something in your life go awry, get a quote today.