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Owning a property and having a mortgage is one of the greatest financial responsibilities most of us will ever have. Whether it is your own home and family involved or maintaining an investment portfolio the best laid plans can go horribly wrong when an unexpected accident, sickness, or even death occurs.

At Creative Finance we believe all clients should responsibly review their insurance arrangements at the time they review or organise their mortgage. Simply ask one of our Creative Finance consultants and we will organise for a qualified insurance specialist to speak with you about your needs.

Types of Cover

There are 3 main types of personal insurance cover that need to be considered. In simple terms they are as follows:

• Income Protection – provides 75% of your income potentially all the way to age 65 in the event that sickness or accident prevents you from earning all or part of your income. Income protection is tax deductible.
  
  
• Trauma / Critical Illness – provides a tax free lump sum of money if you suffer or are diagnosed with any one of an extensive range of illness or accidents. To be paid the benefit you do not necessarily need to have taken time off work. Examples of conditions include heart attack, cancer, paralysis, loss of sight / limb.
  
  
• Life Insurance – Pays a lump sum in the event of your death or, for most policies, if you are diagnosed with a terminal illness with less than 12 months to live.

Examples of Use

Often it is difficult to understand when and how these insurances may be of value. The following examples aim to give you an insight into their use and potential benefit.

Scenario 1: John and Kate have their own home and mortgage. Kate has taken time of work to have their second child. They decide that John should take out Income Protection as they are reliant on his income to pay the mortgage and meet basic living expenses. They both also consider Trauma and Life Insurance to make sure there is enough money to pay off the house and raise the children in the event either of them becomes sick or was to die unexpectedly.

Scenario 2: Mary has worked hard and has 2 investment properties. Being single with no children Mary decides that she does not need Life Insurance. However Mary realises that her investment properties rely on her income and the tax refunds she receives. To ensure that Mary can hold the properties, rather than be forced to quick sale, Mary decides to take out Income Protection to protect her portfolio and considers Trauma Insurance in case she needs a lump sum of money.