I think it's great you are thinking about establishing protection for your family. Many people in your age group with conflicting commitments or goals overlook establishing the foundations to their family's financial security.
There are so many insurance product providers and insurers in the market place and different types of insurance, it is not surprising that you are feeling overwhelmed. Insurance 101....There are 4 types of personal insurances you should have (apart from health insurance)... Life, Total and Permanent Disability (TPD), Trauma and Income Protection.
Life cover is straightforward, it pays the sum insured upon death. TPD is when you can never work again so a worse situation than death financially as you are still around needing your bills paid, additional medical costs and still want your children to be provided for. Trauma is a lump paid upon diagnosis of a critical illness such as heart attack, cancer, stroke and regardless or whether you take time off work or not, you receive the lump. For some conditions it is a quick treatment and you are back at work promptly, or could be (according to your doctor). You just put the lump off your mortgage and jump ahead financially. Sometimes there is prolonged treatment and inability to work, very expensive treatments, going overseas for the latest treatments. Also, many clients when faced with a traumatic illness may be able to return to work but don’t want to – taking time to build their health or reassess their jobs/lives. Income Protection covers temporary and permanent inability to work due to sickness or injury, providing 75% ( in some cases 80%) of your salary.
Whilst it may appear having all of these insurances is overkill, you actually don't know which adverse life event will occur first, so it becomes important to structure your insurance like an investment portfolio catering to all your needs. Personal Protection is all about providing certainty in the even the unexpected happens.
You may need a Financial Planner to assist you in determining what level of cover you require for each type of insurance. This is usually worked through asking you - "what do you want for your family in the event of....." and what are the tradeoffs if you want to reduce the level of cover (due to cost).Structuring the protection portfolio can be done cost effectively by having Life cover and some TPD in superannuation (paid by your compulsory employer super) and having Trauma and Income Protection and some TPD outside super (the latter important so it doesn't get locked away into Super). Note: Income Protection is tax deductible which helps dilute the cost. Once again, a Financial Planner can help with taking you through how insurance products compare and the definitions which sets the policies apart. The price of insurance also depends on your health, age, occupation and whether you smoke. Given that you don't have any sick leave you will need your Income Protection to clock in fairly quickly, so your waiting period should be a maximum of 30 days. The Accident Policy you have in place may be limited if it is not a full Income Protection Plan. You should also be aware that you may find it difficult to obtain Income Protection personally if you are not working a certain number of hours per week (varies between insurers) and because you "working casual from home" you are likely to need to provide more detail about your income for the insurer to determine what is regular income.
In relation to a full contingency plan you should also have wills and powers of attorney in place to make it easier on your family if the worst should happen. Phew - that's a lot of info - hope you find it helpful.
By Michelle Tate-Lovery CFP®