When you think about the plans you have for your life, you probably aren’t thinking about the bad stuff – loss of income, serious injury, major illness, and death.
But let’s face it, you’re guaranteed to experience one or more of these at some point in your life.
In fact, most people are one major catastrophe away from losing it all or at least having to take a huge step back from building wealth and reaching their financial goals.
These 04 types of insurance help homeowners keep moving forward financially or minimize setbacks when life doesn’t go as planned.
Learn how insurance advisers can help you protect your family
01 Mortgage Protection
Mortgage protection insurance is exactly what it sounds like. In the unfortunate event of serious injury or major illness and you can’t work, your insurer will pay your mortgage repayments.
You choose an amount (usually the amount of your repayments), a wait period (usually equal to how long you can go before your emergency fund runs out) and a payment period.
This means in the case you need it, after the chosen wait period, your insurer would start sending repayments to your lender for the duration of the payment period or until you go back to work (whichever is first).
Be sure to discuss what is the right amount, wait period and payment period for your situation with your insurance adviser.
02 Life Insurance
The concept of life insurance is simple. Your insurance company pays out a lump sum of the amount you choose to whom you choose in the event you die or are terminally ill.
Because it’s a lump sum payment, the tricky part is making sure you chose the right amount, so your loved ones don’t have to worry about how to pay for needed expenses during one of the hardest times of their life.
Typical expenses that life insurance covers are (but not limited to):
- Short-term debt
- Education fees for children
- Funeral costs
- Household expenses
You might be wondering, “How will I know what my expenses will be?”
This is where an insurance adviser is worth their weight in gold (thankfully, you won’t have to pay anything for their service).
The insurance adviser will help you decide how much you’d like to insure.
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03 Income Protection
The single most important aspect of building wealth and reaching financial freedom is your income – it’s literally the biggest asset you have.
That’s why it’s so important to have protection if you lost it due to serious injury or illness (temporarily or permanently).
The way it works is it gives you up to 75% of your income to live on until you recover your income or longer depending on your policy.
Most people use their emergency fund for this (if they have one), but since you can’t predict how long you’d be without an income, having income protection insurance extends the period where you’d be able to cover your needs while looking for a new job or getting your business back on track.
Because your income changes over time (hopefully increases), meeting with your insurance adviser regularly to review your insurance needs is important.
04 Landlord Protection
One major way to build wealth that we teach people is to invest in property. But with a huge potential to multiply your wealth comes a fair amount of risk.
Landlord protection insurance protects you from financial losses related to your rental property.
Landlord protection can cover (but not limited to):
Damage caused by renters
Loss of rent
Like any other insurance, your need for landlord insurance likely changes over time, so be sure to meet with your insurance adviser regularly for a review.
Keep in mind this article is providing general information and not advice.
To protect your family and financial future against unfortunate events get personalized advice and a quote free from an expert.