Life insurance can be confusing, but it can be a real lifesaver if disaster strikes. We talked insurance basics with Rick Mapperson, who has almost 20 years experience in the insurance industry and is the founder and managing director of Rick Mapperson And Associates.
RESCU: Can you explain the different types of personal insurance?
Rick Mapperson: There are four basic types of personal insurance which all meet different needs and situations:
- Term life insurance
- Income protection insurance
- Trauma insurance
- Total and permanent disability insurance.
Term Life Insurance
When you choose this type of coverage you pay for a specific lump sum that is paid if you die. The payout can be used for any purpose – to pay off debts, or invested to generate an income stream for your surviving family.
Income Protection Insurance
This type of insurance is also known as ‘accident and sickness insurance’ and is vital for anyone who is an employee or an employer and relies on an income (most likely you and/or your partner!).
Income protection can replace up to 75% of all your income for up to 70 years of age if you are unable to work due to unexpected illness or injury. This way you won’t need to sell your house, business or possessions. Instead you will be able to maintain your lifestyle and keep paying your bills, mortgage or loans.
Trauma Insurance
Otherwise known as ‘crisis’ or ‘vital’ cover, trauma insurance pays out a lump sum on the diagnosis of a range of life-threatening conditions such as cancer, heart attack, stroke and paralysis.
Trauma insurance is designed to pay the medical bills associated with a major illness, or fund a holiday, pay out a home mortgage, or allow the injured person to work part-time until retirement.
Total and Permanent Disability Insurance
Total and Permanent Disability Insurance Cover (TPD) is a one-off lump sum payment that is made if the life insured becomes totally and permanently disabled. The payment can be used to eliminate debt, pay ongoing medical expenses, make necessary home modifications, or to hire home care services.
2. Can you give us some pointers on how to find the right insurance for us?
Rick Mapperson: Insurance is a complicated area and you really do need expert advice. There are things to consider that are hard to quantify, such as which insurance company may be more sympathetic when it comes to pre-existing health issues.
You actually risk being under-insured by not getting a specialist broker to look at your individual situation. For example, if you are receiving multiple sources of income through investments, this could be overlooked.
It is best to get an experienced broker to help you with choosing types of cover, sums insured and which company to insure with.
3. How do we go about finding a reputable broker?
Rick Mapperson: Just like you do for many other important decisions, it is worthwhile talking to your friends for personal recommendations.
The internet does not guarantee a good result and has a lot of misleading information about personal insurance.
You should be looking for a broker who:
- is experienced
- is specialised in personal insurance
- is trustworthy and understanding (after all, you are asking them to help you take care of what is most dear to you – the welfare of you and your family)
- offers personal service and is independent.
4. What type of questions should we ask a prospective broker? And what should we expect from our broker?
Rick Mapperson: Exercise your right to ask a broker as many questions as you like.
Find out:
- How long have they been in business?
- What insurance companies do they deal with?
- Are they independent or are they licensed by a specific Life Insurance office?
- What are their fees?
A good broker should first of all listen to your needs and will be clear in their recommendations, take care of the paperwork and any follow up requirements, and will review your policies on an annual basis at the very least.
About Rick Mapperson And Associates
Rick Mapperson And Associates is a specialised Insurance brokerage based in Sydney. As a boutique insurance brokerage, it can assist you in finding the best insurance at the best price.
The focus of Rick’s business is specialised to insure people, and to do it well. Rick combines his skills as a licensed Financial Planner and his understanding as the co-founder of an Australian charity focused on families, to understand the best interests of his clients. Not being tied to one insurance company means he finds the right insurance solution for each individual situation, at the best price. To find out more, go to www.sydneyinsurancebroker.com.au
