The importance of Personal Insurance 

By Will Raleigh | August 2025 

Insurance is a waste of money — until the day you need it. 
No one enjoys paying their car insurance premium each year, but the moment another driver crashes into you, you’re grateful it’s there. The same goes for home insurance, in the devastating event of a flood, fire, or storm, the financial loss without cover is almost impossible to recover from. 

An old adviser once told me, “Everyone should allocate around 10% of their income to insurance.” At first, it sounds excessive — but when you weigh it against the risk of losing your home, your income, or your ability to provide for your family, it suddenly makes perfect sense. Insurance is not about wasting money; it’s about protecting everything you’ve worked hard to build.  

In my opinion, these are the insurances that make sense for most people:  

• Health Insurance – Good health is the foundation of a good life. Without it, quality of life suffers, and medical costs can quickly add up. 

• Car Insurance – If your car is damaged or written off, you may lose your ability to get to work, run errands, or earn an income. Car insurance protects your mobility and independence. 

• Home & Contents Insurance – Your home is more than a building; it’s your security and your family’s safe place. Without cover, losing your house could mean financial ruin and nowhere to live. 

• Life Insurance – Provides a lump sum payment to your beneficiaries if you pass away, helping your family cover debts, living expenses, and future goals. Many policies also allow early access if you’re diagnosed with a terminal illness. 

• Total and Permanent Disablement (TPD) Insurance – Pays a lump sum if you become permanently disabled due to illness or injury and are unable to work again, providing financial security when you need it most. 

• Income Protection Insurance – Replaces up to 70% of your income if illness or injury prevents you from working, ensuring you can continue to pay bills and maintain your lifestyle. Premiums are generally tax-deductible. 

• Trauma (Critical Illness) Insurance – Provides a lump sum if you suffer a major illness or injury such as cancer, heart attack, or stroke. This cover helps with medical costs, rehabilitation, and lifestyle adjustments so you can focus on recovery without financial stress. 

When it comes to calculating how much insurance you need, some covers are relatively straightforward. Health, Car and Home and Contents insurance providers often have calculators to assist with cover amounts.  

However, when it comes to life insurance, TPD insurance, income protection, and trauma cover, the calculations are more complex because they depend on your personal circumstances. For life and TPD insurance, we need to consider your debts, ongoing living expenses for your family, and future goals such as education costs. Income protection requires an understanding of your earnings, monthly expenses, and how long you may need cover if you can’t work. Trauma insurance is about anticipating the additional costs of recovery from a serious illness – from medical treatments to time off work and even home modifications. These types of cover are more personal and tailored, which is why advice is critical to get the right balance of protection without over (or under)-insuring. 

Over time, as your circumstances change, so too should your insurance. Your cover needs to be flexible enough to meet every circumstance. You might want to increase your cover to reflect added responsibilities such as increased debt commitments. Conversely, you may want to decrease your cover as your financial wealth grows.  What is important is that you are paying for the insurance that makes sense for you. 

Need a review of your insurances?  Contact us today for a free consultation to analyse your current position and ensure your assets and income are properly protected.