What is your most important asset?
Most people think it’s their home, car or investments but it’s not what keeps your lifestyle running. Your ability to earn an income is. If something unexpected happened and you couldn’t work, what would happen to your finances, your mortgage or your family’s future plans?
That’s where risk insurance (also known as personal insurance) comes in. It’s designed to protect your income, lifestyle and loved ones from the financial impact of illness, injury or death.
In this article, we’ll explore what risk insurance is, the main types of cover available and why having the right mix can form an important part of your financial plan.
Table of Contents
What Is Risk Insurance?
Risk insurance refers to a group of personal insurance policies designed to provide a financial safety net when life doesn’t go as planned. It’s about having a backup plan that ensures you and your family can meet living costs, pay debts and maintain stability if something serious happens.
Think of it as a protection plan for your financial stability that supports your broader goals and complements areas such as superannuation, investments and estate planning.
Types of Risk Insurance
Each type of insurance plays a different role. Together they can provide peace of mind that you’re covered for a range of circumstances.
1. Life Insurance
Life insurance provides a lump-sum payment to your chosen beneficiaries if you pass away. It helps cover ongoing living costs, debts and future needs like education or household expenses, ensuring your loved ones remain financially secure.
Read our full guide to Life Cover
2. Total and Permanent Disability (TPD) Insurance
If illness or injury leaves you permanently unable to work, TPD insurance pays a lump sum to support ongoing care, living expenses or debt repayments. Depending on your situation, it can be held inside or outside superannuation.
Learn more about TPD Insurance in Super
3. Trauma Insurance
Trauma insurance provides a one-off lump sum if you suffer a serious medical condition such as cancer, heart attack or stroke. It’s designed to help with immediate medical expenses and recovery costs, giving you space to focus on your health rather than your finances.
Explore our guide to Trauma Insurance
4. Income Protection Insurance
Replaces a portion (generally up to 70%) of your income if you’re unable to work temporarily due to illness or injury. Regular monthly payments can help maintain your financial stability while you recover.
Discover more about Income Protection Insurance
What’s Your Plan B: Protecting Your Most Important Asset
Your income is your most important asset. Each type of insurance covers a different “what if” so having the right combination helps ensure comprehensive protection. The right mix will vary depending on your stage of life, family structure and financial commitments.
If you were suddenly unable to work due to illness, injury or incapacity, would your income, debts and family be protected?
That’s why it’s so important to work with your adviser to complete a detailed needs analysis. Together you can determine the appropriate levels of cover based on your current situation and future financial goals.
Speaking with your adviser ensures your plan is built around your life, helping you protect your income, your assets and your family’s future no matter what happens.
When to Review Your Cover
Your circumstances can change quickly and your insurance should evolve accordingly. It’s worth reviewing your cover when you:
- Start a new job or business
- Buy a home or take on new debt
- Get married or have children
- Experience a change in income
- Approach retirement
Many superannuation funds include life insurance, TPD and income protection by default. However it’s important to review these levels of cover and premiums with your adviser to ensure they’re appropriate for your needs.
Even if you already have insurance through super, it’s worth checking whether the definitions, exclusions and benefit amounts truly reflect your circumstances. An adviser can help you compare options and understand the trade-offs between holding cover inside or outside super.
How Carbon Can Help
We simplify risk insurance by cutting through the jargon and explaining your options clearly. Because we work alongside accountants, finance brokers and financial planners, our advice considers your entire financial picture, not just insurance in isolation.
We’ll guide you through each option and help structure your policies, including ownership, to deliver the best possible financial outcomes for you and your family.
Whether you’re starting from scratch or reviewing existing cover, we’ll help you build a plan that fits your lifestyle, budget and long-term goals.
Book a review of your current risk insurance policies with Carbon Wealth Management to ensure your protection aligns with your financial objectives.
Protect What Matters Most
The risk insurance landscape is constantly changing. Insurers and super funds regularly update product features, policy definitions and pricing. What might have suited you a few years ago may no longer provide the same level of protection today.
Regular reviews with your adviser help you stay on top of these changes and ensure your cover remains relevant and effective when you need it most.
Your income powers your lifestyle and risk insurance helps protect it, making sure that no matter what happens your plans stay on track.
If it’s been a while since you reviewed your cover or you’re unsure what’s included in your super, now’s the time to check in.
Speak to our Wealth Management team today to review your risk insurance and make sure you’re protected where it counts most.
Common Questions About Risk Insurance
There are four core types of risk insurance: life insurance, total and permanent disability (TPD) insurance, trauma insurance and income protection. Each covers a different “what if” and together they create a complete protection plan.
No. Life insurance is one type of risk insurance. Risk insurance is a broader category that also includes TPD, trauma and income protection.
Yes. Some policies, like life and TPD insurance, can be held inside super. Others, such as trauma cover, must be held outside. The right structure depends on your personal and tax situation.
Income protection replaces part of your income (usually up to 70%) if you’re unable to work temporarily due to illness or injury. It provides regular monthly payments to help you manage ongoing expenses while you recover.
The right level of cover depends on your income, debts, dependants and lifestyle. Working with an adviser can help you identify the amount of protection needed for your current and future financial goals.
Some policies, such as income protection, may be tax-deductible. Your accountant or financial adviser can confirm what applies to your situation.
Not always. The right mix depends on your circumstances and what risks you want to protect against. Your adviser can help you find the right balance based on your needs and budget.
