Knowledge Centre

Safeguarding your home and livelihood: the importance of Personal Insurance for homeowners

14/3/2024

Owning a home is a significant milestone, representing stability, security, and a place to call your own. However, the joys of homeownership also come with responsibilities and financial obligations that need careful consideration.

While home insurance protects against property damage, there’s another crucial aspect that homeowners should prioritise: personal income insurance. In this blog post, we’ll explore the benefits of income insurance tailored specifically for homeowners.

Protection against income loss

Personal insurance, also known as disability insurance or income protection insurance, provides a crucial safety net for homeowners by replacing lost income in the event of a disability or inability to work due to illness or injury. This coverage ensures that you can continue to meet your mortgage payments, utility bills, and other household expenses if you’re unable to work.

Maintaining financial stability

For many homeowners, their ability to earn income is their most valuable asset. Personal insurance helps maintain financial stability by guaranteeing continued support yourself and your family, regardless of unexpected circumstances that may prevent you from working, such as illness, injury, or disability.

Protecting your home

Beyond being a place of comfort, a home represents a significant financial investment. Personal insurance safeguards this investment by ensuring that you can keep up with mortgage payments and other housing-related expenses, even if your income is temporarily disrupted due to unexpected events.

Peace of mind for your family

The financial security provided by personal insurance extends beyond just covering your mortgage and household expenses. It also offers peace of mind for your family, knowing that they will be taken care of even if you’re unable to work. This can alleviate stress and anxiety during challenging times and allows your loved ones to focus on providing care and support when you need it most.

Flexibility and customisation

Personal insurance policies are flexible and can be tailored to meet your specific needs and circumstances as a homeowner. You can choose the level of coverage, benefit period, and waiting period that best suits your financial situation and preferences. This customisation ensures that you have the right protection in place to safeguard your home and livelihood.

But do I really need it?

These are some real-life recent examples provided to us by our Personal Insurance experts at Wealth Collective:

• 42 y.o. male (Mining)
• Killed in a motorcycle accident on a weekend.
• Life benefit of $2,117,787 paid to his family.
• Cleared all debt on the family home and established a ‘future fund’ for his two daughters to assist with education costs and any future financial needs, like assistance with home deposits when older.

• 37 y.o. female (Support Work)
• Suffered a stroke.
• Trauma claim of $53,675 paid out.
• Client chose not to have income protection and has been unable to return to work after almost nine months – however the Trauma payment still massively helped with the costs of living during her recuperation.

• 38 y.o. male (Mining)
• Heart attack after a CrossFit class (found later to be stress-related).
• Paid $165,375 trauma benefit by as a tax-free lump sum to help with medical treatment and rehabilitation expenses.
• Paid a further $3,000 to cover financial advice relating to best use of the claim payment.

• 40 y.o. male (Business owner)
• Fractured ankle playing a social soccer game, six months off work.
• Income protection benefit (paid monthly), total paid of $41,536.
• Ensured the business could still operate profitably, and the client could continue to cover home loan repayments and normal daily expenses.

• 28 y.o. male (Concreter)
• Fractured foot surfing, four months off work in a moon boot.
• Income protection benefit (paid monthly), total paid of $32,100.
• Made sure the family (non-working partner and children) could continue to cover the repayments on a new home loan without being forced into financial hardship provisions with the bank.

Conclusion

As a homeowner, protecting your home and livelihood should be a top priority. Personal insurance offers invaluable financial security by replacing lost income in case of an inability to work. By investing in income insurance, you can safeguard your home, maintain financial stability, and provide peace of mind for yourself and your loved ones, knowing that you’re fully prepared for whatever life may bring.