π¨ insurances explained - what you need | starter pack
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Why is insurance important in financial planning?
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This podcast contains general financial advice only. That means it's not specific to you, your needs, goals or objectives. So don't act on the information until you've spoken with your financial advisor. You'll find our full disclosure, disclaimer and link to our financial services guide in the show notes.
What types of life insurance should you consider?
Kate Campbell, welcome to this episode of the Australian Finance Podcast.
It is gonna be our fastest episode ever, Owen.
Our fastest episode. Why, Kate? Because it's about insurance and we don't, well, you don't necessarily like talking about insurance that much.
Yeah, I think insurance is a really big topic and often needs experts involved. And so I wanted to just do a super high level overview of all the different types of insurances that we could think of off the top of our head this morning. and maybe a little bit about what they are. And then if you're interested in each one, either let us know to do a whole episode on it or go and do some research and we'll provide all the links to learn about each of these insurances in the show notes.
Okay, so first of all, why do you need insurance? Insurance is really important because you don't want to blow yourself up. People think that insurance is just an unnecessary cost, but it's actually something for that like 5% of time or that 1% of the times when things go really bad. So it's about protecting you and keeping you in the game. One of the things that I learned when I was studying finance is that typically what keeps poorer people poor is the inability to recover from loss. Whereas rich people can recover from losses. That's the general definition. It's not my definition, but that's generally accepted. And the way you protect yourself is by having insurance. We're gonna talk about the different forms of that in just a moment.
Just at the outset, a couple of quick things like terminology wise. When we say premium, that's the amount that you pay. So if you have $1,000 car insurance premium, that's what you have to pay. When we talk about excess, that's what you have to contribute if something goes wrong. So if you crash your car and you have to pay $1,000, that's your excess. Waiting periods, that's the time for when you sign the insurance, how long till you can make a claim. And a claim is when you actually lodge with the insurer. Okay, Kate, now we've done those definitions. Let's get into a quick fire.
All right, very first one, which we touched on in our super episode, life TPD and income protection insurance.
Yeah, so life should be called death insurance because then you know what it covers. It covers if you pass away and it typically goes to whoever you nominate.
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Sounds like good money advice... But is it?