A Break Down of the Insurance Coverage in my Twenties

I was looking at my budget and realized that after the mortgage payments and utility bills, insuran...

I was looking at my budget and realized that after the mortgage payments and utility bills, insurance premiums were my next largest expense. I thought it would be a useful exercise to consolidate the various policies and tally up the premiums to put things into perspective and to show what my breakdown of insurance coverage looks like in my twenties.

I had previously thought trauma insurance was a bit of a luxury, however the trauma insurance premium (which I’m actually in the process of applying for and will write about soon) is less expensive than the premium for one car. Weighing up the risk vs rewards for each policy, I’m comfortable with the amount I’m paying (except for the Lender’s Mortgage Insurance but unfortunately that’s unavoidable). Also, I look forward to working in the CBD again one day so we can sell the car and get rid of one of the car insurance policies, but until then, the car insurance is also necessary.

Life Insurance
  • $325,000 Insured Death Cover through AMP Superannuation ($0 premium)
  • $325,000 Total and Permanent Disablement Benefit through AMP Superannuation ($0 premium)
  • $5,312 Monthly Income Protection Cover for up to 2 years – employer funded through AMP Superannuation ($0 premium)
  • $250,000 Benefit on the AMP Elevate Trauma Insurance Plus Plan + Reinsurance Coverage ($80 monthly, level premium)
  • Total life insurance premiums: $80 per month
Other Insurance
  • Basic Hospital and Flexi Extras (Dental, Optical, Physio etc) Private Health Cover through Medibank ($88 monthly premium).
  • Comprehensive Insurance for two cars through CGU ($235 monthly premium, however this is shared with my partner)
  • Lender’s Mortgage Insurance (this was a one-off compulsory requirement of $12,000 because we didn’t have a 20% deposit for our apartment purchase. I aim to pay off the mortgage in under ten years so I’ll divide the $12,000.00 over 10 years, bringing it to $100 per month)
  • Total other insurance premiums: $305.50 per month
Total Premiums: 385.50 per month
Personally, I’m not interested in home and contents insurance (we live in a secure apartment), funeral insurance, mobile phone insurance etc. There are certain events that I would be willing to pay for directly out of my savings.
When I’m in my thirties, I envisage that the following changes will be made to my insurance coverage:
  • Increasing my income protection insurance to cover income payments up to age 65 (rather than just for 2 years). I have recently found out income protection premiums are 100% tax deductible so this will be the next step;
  • A year before I plan to have kids, I’ll take out the top level private health cover which includes obstetrics; and
  • When I have kids, I will take out a higher level of life insurance.
I suspect that I may be under insured however it’s very subjective, others may think that I’m paying far too much insurance for my age. I’d be very interested to hear your thoughts and experiences.

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