Most of us tend to look on the bright side of life and blithely assume that we are in complete control of our current circumstances. But accidents, illness and death are always a possibility that could wreak havoc on the ordered lives of those around us.
Protecting against uncertainties with personal insurance policies is a sound and practical idea, ensuring you are guarded against unforeseen circumstances that may affect your quality of life. At the very least, it offers peace of mind.
There are a range of policies covering different circumstances and the three main types - income protection, total and permanent disablement or disability, and life insurance are explored here.

Income protection
Simply put, income protection insurance replaces your income if you are unable to work due to accident, sickness, injury or disability. The insurance will cover up to 75% of your annual income and may be paid in a tax-free lump sum or an agreed amount per month.

Consider John who was involved in a car accident which left him with back and neck injuries, rendering him unfit to work for several months. His car insurance took many months to work its way through the claims system. With little or no savings, a limited amount of sick pay entitlements and no avenue for workers compensation, John's mortgage payments, bills and living expenses continued to accumulate.

Had he taken out income protection insurance, John would have been covered for a percentage of his salary - meaning his bills would continue to be paid and his financial worries would not accompany his back and neck pain.

Premiums on income protection insurance vary depending on the age, sex, medical history, smoking habits and occupation of the insured and there is often a waiting period of 14-30 days.
A range of policies available on the market means this type of insurance can accommodate an individual's particular needs and as with all insurance policies, the terms should be understood.

For example, a policy that is non-cancellable and guaranteed renewable cannot be changed even if your circumstances or income levels do. A guaranteed renewable policy means that whilst the insurer is unlikely to change the terms, they can. A conditionally renewable policy offers virtually no guarantees on the terms of the insurance.

It is worth seeking advice from those who understand the terms and nuances to ensure you're certain about what it is you're covered for in the event of an unfortunate incident.

Total and Permanent Disablement (TPD)
As the name suggests, these policies are applicable in the event of an accident which results in paraplegia or quadriplegia and, on a sliding scale, for the loss of eyes, ears and limbs. The benefit of this policy is that it is paid in a lump sum which would assist in expenses such as the purchase of, or renovations to, a house that can accommodate a wheelchair, medical bills and other costs associated with such an accident.

If taken in conjunction with income protection insurance, the insured would have finances both upfront and on a continued basis as stipulated in the policy to secure their fiscal future.

Life Insurance
Life insurance provides payment to your nominated beneficiary if you lose your life or are diagnosed with a terminal illness (in most cases meaning a life expectancy of 12 months or less). This is a must-have insurance policy for those who have dependants and want to ensure they are taken care of in the event of their death.

Take the case of William: 45 years old, married with a $450,000 mortgage and two children in private school. William passed away unexpectedly with no life insurance to protect his family. In addition to their grief at losing a husband and father, William's wife was unable to keep up with the mortgage payments and was forced to sell the family home. Private school fees were also now unaffordable, meaning the children were uprooted from their school and friends, as well as their home.

Life insurance policies may be amended so cover is reduced in order to accommodate existing family budgets - and some cover is always better than none at all. These personal insurance options are not overly expensive and may provide an enormous amount of assistance when you need it most, as well as peace of mind in the meantime.

Many insurance brokers are able to offer assistance and explanations in negotiating which cover is the right one for you. Most insurance brokers offer a free service as they are paid by the insurance company you take out a policy with, so it is worthwhile taking the opportunity to seek advice in this sometimes complicated area.

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