Life insurance; that thing we don’t really want to think about because let’s face it, no one wants to think about when life might go a little off course. And many Australians don’t think about it until they have to. A Deloitte study revealed that there are four significant milestones when people most commonly decide to buy life insurance – getting married, having children, buying a home or retiring.
In an effort to be financially prepared for whatever life throws at us, here are some tips to help you consider whether or not it’s time to get life insurance.
What are the benefits of life insurance?
Life insurance is there to cover you if the worst happens – either you die or become disabled – so that your dependants have funds to deal with the impact that a significant event would have on their finances.
There are varying levels of cover you can get when setting up your life insurance plan, and you can add or reduce cover when things change. Insurance plans can hinge on how many dependants you have, if you have a mortgage or if you get married.
For instance, when you’re having another child, you can add more cover to your life insurance plan. Or, you can reduce cover if you no longer have a mortgage.
How much cover do I need?
Try comparing your current household income against what it would be minus your salary if you were to die or become disabled – would your family be able to pay all the bills and lead the same lifestyle? This is a good place to start when deciding how much life insurance cover you need.
Of course we can’t always afford the ideal number, but it’s something to work towards.
When should I get life insurance?
The good news is that you may already have life insurance. Some superannuation funds automatically include life insurance when your super account is set up. You’d need to check with your provider as to how much cover has been provided, since you may want to modify it based on your needs.
There are a few potential benefits to consider when thinking about whether or not to get life insurance earlier in life. First, you may get better rates since you’re likely to be healthier when you’re younger. Good health will improve your premiums. Some insurance providers also start to limit the amount of cover you can take out as you get older, so you can take out larger sums earlier in life.
A few things to keep in mind:
- Life insurance provides your dependants with a lump sum if you were to die or became disabled.
- Compare your current household income against what it would be if you weren’t there to contribute; the deficit will give you a good estimate for the amount of cover you ideally need.
- You may already have a certain amount of life insurance cover through your super.
Our member support team can help you with your life insurance cover and let you know if you have been automatically set up for an amount of life insurance through your super account with us. Contact us today for more information about life insurance options.