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Chapter 1: What is the main topic discussed in this episode?
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Welcome to the Australian Finance Podcast, a podcast for people who want to learn more about their personal finances and get the most from their money. This series is hosted by Kate Campbell from HowToMoney and Owen Rascovich from Rask Finance.
The Australian Finance Podcast is provided for educational purposes only. The information is general in nature and does not take into account your needs, goals or objectives. What that means is the information does not apply to you specifically. So consider getting the advice of a licensed and trusted professional before acting on the information.
Welcome to the Australian Finance Podcast and today we're going to be talking about... Insurance. Yes, that fun topic everyone loves to talk about.
That's it, we should put a big drum roll in there. We're talking about all different types of insurance and we're hopefully going to do it quickly enough that you don't fall asleep and make it a little bit enjoyable so you get something from it. And there'll be actionable takeaways and show notes and a checklist.
yes which i haven't created yet but by the time we send this live i will have created that so don't worry it'll be there and you'll be able to use that and um get pushed in the right direction i guess so what are we going to talk about what's what's what's what's first
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Chapter 2: What types of insurance are discussed in this episode?
It takes five minutes. Just give it a shot. Log into your super account and just work it out. The next one. Funeral insurance. I saw you included that one. Yeah, so this is just a quick one. Funeral insurance. Obviously, it pays for funeral expenses. In my opinion, I've never looked into it getting it myself because I'm still quite young. Obviously, this is like a probably later in life thing.
Yeah.
but i don't i'm not a big fan of it because if you have like we've been talking about throughout this entire series is an emergency fund insurance funerals can be expensive but if you have that emergency fund you may be able to cover that expense right you might not get you know a horse and cart carrying the coffin down the road but you might get you know what you need yeah and it's probably going to take away the headache and you don't have to pay the premiums now the next one
Health insurance.
Do you have health insurance?
Yes, I do.
Okay, cool. I won't ask you who on air, but who you go with, but that's all right. We'll talk about that later. Health insurance. So most people are familiar with health insurance and it generally pops up around April every year. You always see really expensive ads put on the TV.
Some of them look like little rats or ferrets that pop up on the TV and then there's one that looks like a creepy dude that's talking about insurance. Okay, health insurance. it's important to know the two different things that go into it. There's extras and then there's what we call hospital cover.
Most people don't know that they're two separate things and you don't have to have, you can have one and not the other and you can have one from, you could have one of each from a different health insurer. So hospital obviously covers you for when you go to hospital and you have an emergency.
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Chapter 3: How does insurance inside super differ from outside super?
And one of the things that you'll notice is that Often the names that you least expect have the best type of extras cover. So choice, the website choice characterizes extras cover as budget management. So a lot of people have done studies to find that if you just put money aside, you're probably better off than actually taking the extras cover. Yeah.
So my rule of thumb is that if I was to pay, you know, if I was planning to pay more than $2,000 a year on extras like dental or whatever, I would probably consider getting health insurance. That's just my line in the sand. It's not like definitive because obviously you could be someone that needs some sort of weird tooth procedure that costs you a lot of money. Yeah.
But then you've got to be careful because a lot of the extras will only cover up to a certain amount on each dental wall. They won't cover certain dental treatments.
This is how crazy it is, right? This is how crazy the health insurance system is. Health insurers have relationships with different hospitals and dentists. Hmm. So you don't know who those are. So you don't know like what the deal is. What are you getting? But one rule of thumb that I use, another one, is that the best health insurers for extras typically cover 50% of it, whatever it is.
So it might be like if you pay $1,000 for dental, they'll cover 50% because they don't cover the whole thing. You're still out of pocket. Yeah. Okay, so all this, do I need health insurance? Well, maybe, right? That's this completely personal decision, but there isn't a tax incentive. And this is where a very big misconception is. On the TV, they'll be like, do you earn more than X?
Well, you should get health insurance before June 30 or whatever it is, right? This is the thing. no that's not how it always works so if you earn more than 90k for a single or 180k for a household or couple you start to pay an extra tax called the medicare levy surcharge right the surcharge is different to the normal levy yeah that's an extra one right so if you pay more than that
If you earn more than that, sorry, you'll be paying this extra tax. But if you have health insurance, you won't be paying that. So it is possible if you're a, what do you call it? You've got some pretty deep pockets. If you earn a 90K single, that's pretty good, well done. But you could actually save on tax the more you earn. So that's a really good incentive to take out private health cover.
Another important note, that's not extras. It's just the hospital cover. It has nothing to do with extras. Okay. So the question that I always get, and this is a really personal one, is I'm under 30 and I heard there's a rule coming in or there's a rule that if I turn 30 and I don't have health insurance, I need to get it.
And that's a really common question because the way it's marketed makes people think that they have to get it. And if they don't get it by 30, they're going to be locked up and thrown away forever. No. So the way it works is that if you are over 30 and you take out health insurance, it's going to cost you more than if you were under 30 and took it out.
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Chapter 4: What are the three main types of insurance people should consider?
That should be like a no-brainer, but people think it's either they're in the moment, pressure, whatever. Car insurance or any type of insurance through a car dealer, there's been a few ASIC reports that have come out.
I can't cite them verbatim off the top of my head, but you can Google them if you want and you can find out the types of crap that these guys and girls are peddling to people that think that they have to have that insurance. You don't have to. Go somewhere else, get it from a proper, reputable insurer.
For what it's worth, you can also Google car insurance complaint statistics and you'll get an official thing that shows the worst insurers for complaints. Where there's smoke, I found there's fire. Okay. Next one.
Home and contents insurance.
Okay. I'm going to take a breath soon. Okay. Home and contents insurances, the differences. Should I have it? Well, the difference between home and contents is home insurance protects the house, the structure, if you like, and the contents is pretty much if you turn the house upside down, what falls out. That's a very loose definition of what the two are.
If you live in an apartment, you should check to see if you need home insurance or there's a chance that there might be body corp insurance that covers the house or the premises, but you still need contents if you want that. So if you want to protect where you belong, The home is the greatest asset, so take the time to do this or at least consider it.
Do what you want, but just consider it because if someone was to burglarize your house or there was a fire, could you recover?
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Chapter 5: How does life insurance work within a super fund?
I mean, for 99% of Australians...
Yeah, your house is just a huge amount of money.
You're up the creek without a paddle. So definitely consider this. It can cost a bit. If you have, say, contents insurance, it might cost you $400 a year. But I'll get to that in just a minute. If you have home insurance, it might cost you $1,000, $2,000, maybe a little bit more depending on where you live. If you live in far north Queensland, shout out to Port Douglas. Great part of the world.
If you live up there, you're going to be smashed with home insurance. Some insurers will probably won't even touch you because you can almost guarantee you're going to be hit by a cyclone every year and it's going to be very hard. Also, if you're in a bushfire zone, again, it's going to be more expensive. It's a case-by-case basis, so just check it out. Shop around.
Things that you can do to lower that expense is things like have deadlocks for theft, but also talk about how you've made your house fireproof or whatever. There are really little subtle things that can go a long way to getting down that cost of insurance.
Okay.
With a house, you can have a replacement or you can have market value, same as like a car. Look into that. If you have contents insurance and you pimp your house out as an Airbnb or on stays, be careful because that can affect your contents insurance. For example, you get someone to come in Airbnb and they just take all the TVs in the house and then you're left with nothing.
Some insurance won't cover that. Okay. Then there's also things like a home office. Be careful. Many cover, but some don't. So I work from home. I have content insurance. I made sure that that was in the policy that I looked at. We're getting there. So don't forget about things like jewelry and engagement rings are a big one, right? People think...
Oh, just, you know, my contents, my jewelry is in my house, therefore it's covered. No, most of the time it's not. If it's over a pre-specified limit, like two grand, five grand, et cetera, it probably won't be covered. Also, one big one, because I'm married, I've got rings. If you're outside of the house, you might not be covered. So...
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Chapter 6: What is income protection and why is it important?
You normally have to get it slightly more expensive.
Yeah, they have like an adventurous insurance.
That's right. And you can't go off the groomed runs, which I tend to do whenever I snowboard. So anyway, that's my key with travel insurance is get it early, but also shop around. Sometimes the one when you book the flights isn't the best one. Yeah. So you can, once again, you can go online. I think Choice and a few of the other comparison sites have some really good info on this.
So just look at it. Credit cards can offer travel insurance if you're that way inclined. Where...
you often have to use the card that's right insurance and pay for the flights and if you've cut up the card in that time it's no longer valid we're not an anti-credit card podcast but i'm an anti-credit card person so i would say like just cut it up yeah but it actually so there has been some studies to show that it can actually help but just make sure that you know what the rules are in terms of do you have to pay for the thing that's covered by the credit card insurance with the credit card or do you just cover anything yeah this is
I mean, this is probably a good thing for someone that's like a business person. You could probably get credit card insurance and not have to worry about paying extra, whatever. But yeah, that's something to look into. Okay, that's a whole lot of information just dumped on everyone.
There's definitely a lot of insurances out there.
Yes. Rule of thumb is like anything that can financially wipe you out, that's probably where you should start. Yeah.
Start with the most crucial insurances first and I guess see where you go from there.
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