Garth Brown Michael Yardney's Commentary, Money & You, Property Investment June 13, 2015
History records (and this is often quoted): An early example of the concept comes from the Code of Hammurabi, Babylonian laws dating back to 1700 B.C., which contain a credit insurance provision.
For a little higher interest, the ancients could exempt themselves from repayment of loans in the event of personal misfortune.
A citizen of the Roman Empire could buy life insurance through the Collegia Tenuiorum for slaves and wage earners, or the Collegia for members of the military.
The funds provided old-age pensions, disability insurance, and burial costs.
In spite of some complications and occasional bureaucratic snarls, the system has worked remarkably well through the ages.
Today, the wise family head will carry a range of insurances including automobile, health, homeowners, personal liability, professional liability and/or malpractice, disability, long-term-care insurance and of course life insurance is essential.
There's more to insurance than fire and theft.
While fire may be one of people's biggest fears when it comes to the possibility of losing their home, according to industry statistics, for every home lost through fire, there are four homes lost through death and 48 through disability.
How much Insurance you need is up to you however there are some insurances for the home owner/investor that you must have.
Mortgage Protection Insurance
Mortgage protection insurance pays your mortgage in the event of an accident or illness that puts your job and earning power on hold.
When you consider that between the ages of 25 and 65 one in three people will suffer a serious illness, this insurance will give you real peace of mind.
It's almost like a form of living life insurance that ensures you could repay the mortgage and have money to live on.
Building and contents insurance
There are two choices in contents insurance – indemnity and replacement/reinstatement.
Indemnity means you are paid the depreciated value of your home and contents, based on age and condition.
Replacement/reinstatement pays out the full cost to an equivalent standard.
Combining your building and contents insurance in one policy may save you money.
Please note: Building insurance is compulsory for your loan
You must have building insurance in place to settle on your home loan, so make sure you have this organised well ahead of settlement.
Insurance for investors
There are also some special policies for landlords, including Rent Cover or Landlord Insurance.
This will protect you if tenants default on payment or if the property cannot be rented due to damage.
Some policies cover normal damage.
Your rights and your will
A legal WILL is essential but surprisingly many people overlook how important it is to have one.
If you die interstate (without a legal will), your estate may be divided according to a Government formula, which may not reflect your wishes and may delay the settling of your estate.
This formula is applied regardless of your situation. However, if you make a legal will:
You can decide how to divide your estate between family, friends and charities
You can appoint who you wish to administer your estate.
You can indicate you preference as to a guardian for your children.
There are many 'do it yourself' will kits on the market but the course of wisdom is to have your legal will prepared by an expert who can assist you with items you may not have considered.
Remember to update it as your circumstances change, and make sure it is always legally witnessed and dated and kept in a very safe place along with other important documents that can be easily accessed in an emergency.
GARTH BROWN'S COMMENT
We are all wary when it comes to Insurance Companies, and stories about claims that never get settled to the policy owner's satisfaction are all over the news, but the reality is CAN YOU AFFORD NOT TO BE INSURED and in fact 'WELL INSURED' to cover all contingencies, as noted above?
It is a good idea to use a reputable Insurance Broker as they are in a position to offer you a comprehensive range of services and products for all your insurance needs both personal and business and give you independent advice.
Phone Garth Brown 1300 ASK CPC