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Hewison Insights

8 important things you should know about personal insurance

Marcus English
Insurance Adviser
27 Feb 2024

Personal insurance and wealth protection are a crucial aspect of financial planning, providing protection against various risks and uncertainties that individuals may face in their lives. Whilst you are working towards your goals, whether short, medium or long term, wealth protection is there to protect your future financial position. Here are eight important things to know about personal insurance.

(1) Types of insurance – personal insurance encompasses various types of coverage, including life insurance, disability insurance, critical illness insurance and income protection.

(2) Risk Management – personal insurance helps individuals, families and business owners manage financial risks by transferring the potential costs of unforeseen events to an insurance company in exchange for premiums.

(3) Seeking Professional Advice – insurance is complex and time consuming, therefore, often helpful to seek advice from specialist advisers when understanding your needs. These professionals can provide guidance tailored to your individual circumstances and help you make informed decisions about your insurance needs. They can help you manage not only what you need now, but also strategically advise on how your needs change over time.

(4) Policy Terms and Conditions – it is essential to understand the terms and conditions of your insurance policies, including coverage limits, exclusions, premiums, deductions, tax implications, waiting periods, benefit periods, expiry ages etc. Reviewing these details carefully with an adviser ensures you know what is covered and under what circumstances.

(5) Reviewing Coverage Regularly – life circumstances change over time, so its essential to review your insurance coverage periodically to ensure it still meets your needs. Events such as marriage, children, buying a home, changing jobs, buying into a business, increased earnings may all warrant adjustments to your insurance policies. Equally, as you pay down debt, children grow up or your own financial position strengthens, you may not have as great a need for the insurance.

(6) Underwriting – underwriting is the process of evaluating a risk to determine if an insurance company will insure it. In personal insurance, we are underwritten medically and financially. That is, assessing our medical history as a risk of claim to the insurer and them determining the terms on which insurance would be offered. Similarly, financial underwriting is assessing our incomes, assets and financial position (either personally or within a business) to justify the insurance being sought.

(7) Exclusions and Loadings – if an insurer deems your application a greater risk than they are prepared to accept at standard rates, they may offer the individual alternative terms. This could include an exclusion, whereby they exclude a certain condition or body part from the policy, or alternatively, a premium loading, where full coverage is offered, but at a higher premium cost.

(8) Claims Process – this is the part of the process we hope we never need to rely on, but ultimately what the insurance is there for. Claims process will involve providing medical evidence from yourself, your employer and your treating specialist, either once off or on an ongoing basis for something like income protection, where the claim is ongoing. Financials may also be necessary. Understanding the process is important, but having a dedicated adviser holding your hand through the process is even better.

Personal insurance and wealth protection are integral aspects of financial planning, offering vital safeguards against life’s uncertainties.

Seeking professional advice and regularly reviewing coverage ensure tailored protection aligned with individual circumstances, providing peace of mind for the future.