Risk Management & Insurance
Protecting What Matters Most
One of the biggest risks to your financial security? Being underinsured when something unexpected occurs—or overpaying for coverage that doesn't match your actual needs.
Whether you're a medical professional with substantial income to protect, a business owner safeguarding operations, or a young family managing debt and dependents, a very effective insurance strategy can provide comprehensive protection whilst managing costs appropriately.
Most Australians hold insurance through their superannuation fund, which generally provides cost-effective life cover and total and permanent disability (TPD) insurance. Whilst superannuation-based insurance can offer cheaper premiums through group rates, it typically provides "any occupation" TPD definitions and may have coverage limits that don't fully protect high-income earners or address specific business protection needs.
Understanding the distinction between superannuation and retail insurance - and determining the optimal balance between the two—can be the difference between comprehensive protection and significant coverage gaps.
Superannuation vs Retail Insurance: Understanding Your Options
Insurance Through Superannuation
Superannuation-based insurance generally offers several advantages for many Australians. Premiums are often cheaper as super funds purchase policies in bulk, and payments are automatically deducted from your super balance. Most super funds provide default cover without extensive medical checks, which can be valuable if you work in a high-risk occupation or have pre-existing health conditions.
However, superannuation insurance typically has important limitations. Coverage levels are often lower than what's available through retail policies. TPD definitions are generally "any occupation"—meaning you must be unable to work in any job to claim, not just your own profession. For medical professionals, executives, and specialists whose income depends on specific skills and qualifications, this definition may not provide adequate protection.
Additionally, default insurance through super isn't specific to your personal circumstances, and coverage can end if you change super funds or your contributions cease. Income protection benefits through super are typically limited to shorter benefit periods compared to retail policies.
Retail Insurance Policies
Retail insurance policies purchased outside superannuation generally offer more comprehensive coverage tailored to your specific circumstances. "Own occupation" TPD definitions mean you can claim if unable to work in your profession—a critical distinction for highly-trained professionals and specialists.
Benefit levels can be structured to match your actual income and financial commitments. Trauma cover, which pays a lump sum if you're diagnosed with a critical illness, cannot be held inside superannuation and must be purchased separately. Income protection insurance through retail policies can offer extended benefit periods and tailored waiting periods to match your circumstances.
The trade-off? Retail insurance premiums are generally higher than superannuation-based cover, as you're paying for more comprehensive definitions and higher coverage levels and a portion of the “own occupation” cover for TPD must be paid personally.
Types of Cover We Analyse
Personal Protection
Life Insurance
Provides a lump sum payment to your beneficiaries in the event of death or terminal illness. We model appropriate coverage based on your debts, dependents, income replacement needs, and future financial goals.Total and Permanent Disability (TPD)
Pays a benefit if you become permanently unable to work. We analyse whether "own occupation" or "any occupation" definitions suit your circumstances, considering your profession, income level, and career specialisation.Trauma Insurance
Pays a lump sum if you're diagnosed with a specified critical illness such as cancer, heart attack, or stroke. This coverage cannot be held inside superannuation and must be purchased separately. We help determine appropriate coverage levels based on potential medical costs, rehabilitation needs, and income replacement during recovery.Income Protection Insurance
Replaces a portion of your income if you cannot work due to illness or injury. We model scenarios considering your occupation, income level, existing leave entitlements, and financial commitments to determine optimal benefit periods and waiting periods.
Business Protection
For business owners and medical professionals running practices, additional insurance considerations often arise.
Key Person Insurance
Protects your business against the financial impact of losing a key employee or business partner. We help model appropriate coverage based on the person's contribution to revenue, replacement costs, and business continuity needs.Business Expense Insurance
Covers ongoing business expenses if you're unable to work due to illness or injury. This can include rent, staff salaries, loan repayments, and other fixed costs, helping maintain business operations during your absence.Professional Indemnity Insurance
Whilst we don't provide advice on professional indemnity insurance specifically, we can help you understand how this coverage integrates with your overall risk management strategy.
Our Insurance Review Process
We conduct a comprehensive needs analysis examining your complete risk profile. This includes reviewing:
Your Current Coverage
We analyse all existing policies across superannuation and retail insurance, identifying what coverage you currently hold, at what levels, and under what definitions.Coverage Gaps and Overlaps
We identify areas where you may be underinsured or paying for duplicate coverage. It's common to find clients paying premiums on multiple super fund policies that won't all pay out, or holding inadequate coverage for their actual circumstances.Personal and Financial Circumstances
We consider your income, dependents, debts, age, occupation, health status, and risk tolerance. For business owners, we examine business structure, key person dependencies, and succession planning needs.Scenario Modelling
We model different scenarios to determine optimal coverage amounts. What happens to your family's finances if you can no longer work? How long could your business survive without your income? What rehabilitation costs might arise from a critical illness?Product Selection and Structure
We work with a panel of referral partners to identify policies offering the most appropriate coverage for your circumstances. Our focus is on securing coverage that matches your needs at competitive rates, not recommending products based on commission arrangements.
Who Benefits from Professional Insurance Advice?
High-Income Earners
If you earn substantially above average income, default superannuation insurance coverage limits may not adequately protect your earnings capacity. Medical professionals, executives, and specialists often require additional retail policies with "own occupation" definitions and higher benefit levels.Business Owners
Protecting business continuity, covering fixed expenses during illness, and ensuring key person dependencies are managed appropriately generally requires specialised business insurance beyond personal cover.Young Families
Managing mortgage debt, protecting dependents, and ensuring adequate income replacement if you cannot work are critical considerations. We help determine optimal coverage whilst managing premium costs within your budget.Pre-Retirees and Mid-Career Professionals
As you approach peak earning years, ensuring adequate income protection and trauma cover becomes increasingly important. Coverage gaps identified now may be difficult or expensive to address later as health conditions develop.Self-Employed Professionals
Without employer-provided sick leave or income continuation, adequate income protection insurance is often essential. We model scenarios specific to self-employment, considering irregular income, business expenses, and the lack of employment safety nets.
Taking the Next Step
Insurance needs change as your circumstances evolve. We recommend reviewing your coverage:
When your income increases significantly
After major life events (marriage, children, property purchase)
When starting or selling a business
Every 3-5 years as a minimum
When approaching preservation age or retirement
A comprehensive insurance review can identify coverage gaps, eliminate duplicate policies reducing your retirement savings, and ensure your protection strategy remains appropriate for your current circumstances.
For professional, personal advice tailored to your circumstances, please reach out below.
At Summit Financial Planning, we excel in precise financial management tailored to your needs. Contact us today for expert assistance.
Summit Financial Planning ABN 28 856 289 615 is a Corporate Authorised Representative of Lifespan Financial Planning Pty Ltd AFSL No. 229892 ABN 23 065 921 735.
Jeremy Douglas is an Authorised Representative (ASIC NO. 001238064) of Lifespan Financial Planning AFSL No. 229892.
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