Risk insurance is the part of financial planning most people put off. It’s the safety net that keeps you and your family afloat if illness, injury or death suddenly takes away your income — often right when you’ve just taken on the biggest debt of your life.
As Brisbane’s highest-rated and most-reviewed mortgage broker, with 2,400+ five-star Google reviews, we help make sure your loan doesn’t become a burden if life goes sideways. We can point you in the right direction on life insurance, total & permanent disability (TPD) cover, income protection, trauma cover and business insurance, and help with the application process.
What is risk insurance?
Risk insurance (also called personal insurance) is cover that pays out when specific life events hit — serious illness, disability or death. The payout replaces lost income, clears debts like your mortgage, or covers medical and living costs so your family isn’t left carrying the load.
One quick distinction, because people mix these up: risk insurance is not lenders mortgage insurance (LMI). LMI protects your lender if you default on your loan — it does nothing for you or your family. Risk insurance is the cover that protects you.
The five main types of cover
Life insurance
Pays a lump sum to your beneficiaries or estate when you pass away, provided the policy is current. It’s there to replace your income, clear the mortgage and other debts, cover final expenses, and leave your family financially stable. A common starting point for working out how much you need is around 10 times your annual salary, or at least the total of your liabilities — but the right figure depends on your situation.
Total & permanent disability (TPD) insurance
Pays a lump sum if you become totally and permanently disabled and can never work again. The money can cover medical costs, clear debts, fund home or vehicle modifications, and keep the household running. Pay close attention to the definition of disability: some policies pay out if you can’t work in your own occupation, others only if you can’t work in any occupation suited to your training and experience. That one word changes a lot.
Income protection insurance
Also called salary continuance, this pays a monthly benefit — typically up to 75% of your regular income — if illness or injury stops you working temporarily. The key settings are the waiting period (how long before payments start; line it up with your sick leave and savings) and the benefit period (how long payments continue). Longer benefit periods cost more but protect you longer. Note it generally does not cover redundancy or job loss unrelated to illness or injury.
Trauma (critical illness) insurance
Pays a lump sum if you’re diagnosed with one of the specific serious conditions listed in the policy — commonly things like cancer, heart attack and stroke. There are no restrictions on how you use the money: treatment, the mortgage, home help, or simply time off to recover. Check the range of conditions covered and the payout triggers, because they vary between policies.
Business insurance
A broad category covering risks to your business. Common types in Australia include public liability, professional indemnity, business property, business interruption, workers compensation (mandatory in most states if you employ people), product liability, cyber and motor vehicle cover. What you need depends on what your business does.
What affects the cost?
Premiums are priced on the type and amount of cover, your age, health, occupation, lifestyle (smoking matters) and sometimes hobbies. Generally, the younger and healthier you are when you take out cover, the cheaper it is — a good argument for sorting it out when you take on a mortgage rather than later. Always disclose pre-existing conditions; insurers may exclude them or charge more, but non-disclosure can void a claim.
Frequently asked questions
What is personal risk insurance?
Cover that provides financial security if you’re hit by illness, injury, disability or death. It typically bundles life insurance, TPD, income protection and trauma cover so your family can maintain their lifestyle and meet financial obligations through hard times.
At what age should you take out life insurance?
There’s no set age — the trigger is having dependants or financial obligations: getting married, having kids, buying a house, starting a business. Premiums tend to be lower when you’re younger and healthier, so earlier usually costs less over the long run.
What counts as a total and permanent disability?
Generally, a condition expected to permanently prevent you from working in your own occupation, or in any occupation suited to your training and experience — the exact definition varies by insurer and policy, as do exclusions.
Does income protection cover redundancy?
Standard income protection doesn’t cover redundancy or job loss unrelated to illness or injury. Some insurers offer redundancy cover as an optional add-on — read the policy documents to see exactly what’s included.
How can a mortgage broker help with risk insurance?
A broker can look at your financial position, help you understand the types of cover available and how much you might need, and assist with the application process — making the whole thing easier to navigate.
Where to from here?
If you’re taking on a mortgage — or already have one — it’s worth an honest look at what would happen to the repayments if your income stopped. That conversation takes half an hour and can save your family from a very hard situation.
This page is general information only. It doesn’t take into account your objectives, financial situation or needs, and it isn’t personal financial or insurance advice. Before acting on any of it, consider whether it’s appropriate for your circumstances and consider seeking advice from a licensed financial adviser. Read the relevant Product Disclosure Statement before deciding on any insurance product.