03.What insurance do you need?
One of the first things you should do when you’re planning a family is review your health insurance; it’s best do this before you’re pregnant as waiting times of 9 to 12 months apply until you would be covered for a full-term birth:
- If you don’t have private hospital insurance, check our report to choose your cover.
- If you already have private hospital insurance:
- Talk to your fund and find out your level of cover for obstetrics. Can you go to a private hospital? Can you go to a public hospital as a private patient?
- Review your excess and co-payments and consider upgrading to a policy without an excess. However, keep in mind the 12-month waiting period for pre-existing conditions that applies if you upgrade to a higher level of cover, even if you stay with the same fund.
- Check with your fund how soon you need to upgrade to family cover (couple and family cover is usually the same price so it won’t cost you more) to make sure that your baby is covered.
If you receive treatment as a private patient, your private hospital insurance will not always cover the full cost. You may be charged a gap: the difference between the hospital and/or doctor’s bill after you receive your Medicare and health fund benefits. How to minimise gap costs:
- Ask your doctor if he/she has gap cover arrangements with your fund and if you will have to pay any out-of-pocket costs. Get this information in writing.
- Ask your doctor if you will be billed by other doctors who may treat you, such as an anesthetist or surgeon’s assistant, and how you can get an estimate of their fees.
- Ask the hospital if it has a current agreement with your fund and if there will be any out-of-pocket costs.
- Confirm any information you get from the hospital and doctor with your fund.
Life, income protection and disability insurance
Review your life, income protection and disability insurance to make sure you and your dependants are covered if something unexpected happens.
Life insurance covers your dependants if you die. As a rule of thumb, the sum insured should be 10 times your salary. However, you may need more depending on your individual circumstances – consider how much you owe, how many children you have and their age. You’ll also need cover if you have a loan such as a home or personal loan. Your premium depends on your age and the amount of cover you need. For example, for a 30 year-old male (non-smoker) office worker a $1 million life insurance policy could cost on average about $380 per year (with your industry super fund) or $580 per year (as a standalone policy through your financial adviser).
Income protection insurance pays up to 75% of your salary if you cannot work because of illness. Premiums vary depending on your risk factors, the waiting period until the benefit kicks in and the duration of cover, which ranges from two years up to age 65. For example, an income protection insurance policy with a 30 day waiting period for a 30 year old male (non-smoker) office worker with a benefit of $6259 per month (75% of a $100,000 salary) for a period of two years could cost on average about $275 per year (with your industry super fund) or $465 per year (as a standalone policy through your financial adviser). Premiums for income protection insurance are tax deductible.
Trauma insurance If you’re not employed because you’re looking after children, you usually can’t take out income protection insurance. Consider trauma insurance instead, which pays a lump sum in case you suffer one of a number of conditions, such as cancer, stroke or heart disease.
Total and permanent disability insurance pays a lump sum if you become permanently disabled because of an accident or an illness such as a stroke. You can be insured against either not being able to do your specific type of work or any work generally.