The most common risks are events that can damage or destroy tangible assets, namely the house, contents and vehicles. The tangible debts such as the mortgage, credit card and car loans should also be insured and most Australians are familiar with this form of protection.

Your income and that of your spouse are possibly greater assets than the family home. Multiplying the family income by the number of years until retirement provides a surprising but reasonably accurate amount that is lost to a family on death. People take out general insurance for cars and homes because it makes financial sense to insure against a future loss that could have a devastating impact on their financial wellbeing.

Intangible liabilities include the future cost of raising and educating children and the much-underestimated cost of providing household duties in the future.

Once a risk is identified, merely taking out insurance does not solve the problem. The correct amount of cover is not the same as the correct cover. Personal risk protection covers the areas of Term insurance Total, Permanent Disablement insurance (TPD), Trauma (also known as Crisis Insurance), Income Protection and Business Expenses Insurance.

The following issues also need to be addressed in relation to the above plans:

• Is the premium stepped or level?
• Can the premium be tax deductible – if so, how?
• Is the level of cover reducing each year, remaining constant or increasing with the CPI?
• Is there tax payable on the proceeds and at what rate?
• By having a different owner of the policy can the proceeds be tax-free?
• Is the amount of tax payable different if the beneficiary is either a non-dependant or dependant person?
• Would an “own occupation” definition be preferable to an “any occupation” definition?
• Should a beneficiary be nominated and should it be a binding nomination?