There are many benefits of a life insurance policy, not just for your own peace of mind but for your family and loved ones as well.
If you’re considering choosing your own life insurance, there are a few considerations you need to take into account before making a final decision.
There are many different options available today, and not all of them will be suitable for what you need, so it helps to do as much research as you can to help ensure you walk away with the product that works for you.
What is life insurance and how does it work?
It’s not something many people like to think about, but have you thought about what would happen to your family if you or your partner passed away? Dealing with the death of a loved one is difficult enough without the added financial worry of trying to support a family on a much smaller income than usual.
Day to day living expenses may not seem like much at the time, but over an extended period they can accumulate into a significant amount. Research from MoneySmart, the consumer advice resource run by the Australian Securities & Investments Commission (ASIC), shows Australian households spent a total of $642 billion on general living costs last year.1
Individually, MoneySmart estimates the average household spends $69,166 a year on general living costs for the whole family.
That adds up to a lot of dollars and added financial pressure for families dealing with the loss of a major breadwinner. However, life insurance can help to ease some of this burden by providing financially for your family even after you are no longer there.
Also known as term life insurance or death cover, a life insurance policy will pay a lump sum to your nominated beneficiary in the event of your death. Depending on the terms of your policy, this could be up to $1 million or more.
This financial assistance can go a long way towards ensuring the security of your family during a difficult time, and it gives you peace of mind your loved ones will be cared for after you are gone.
Choosing a life insurance policy
There are many different life insurance policies in Australia, but not all of them will meet your personal needs. You can tailor your policy to suit your individual needs and one of the key starting points is to think about the level of cover you will need and what extra options you might like to add in for added protection.
Life insurance isn’t just for those who have dependent children; the policies are also available for people aged over 50 who would like to provide for their partner.
Depending on the level of cover you would like to have, you can arrange for cover specifically to benefit your family, or prepare for the event of a serious illness. Some policies will also let you add in cover for accidental death and serious injury, a total and permanent disability or to cover your children.
It can be confusing and time consuming trying to assess and make sense of all the different policies as well as comparing premiums and the features and benefits. There are a number of ways to help you compare a range of insurance policies at the one time. You can visit a comparison site such as Choosi, they can help you compare different life insurance products so you can see at a glance where there may be any gaps in cover. Often you can buy your chosen policy over the phone, without any need for medicals or forms.
If want to seek some professional advice, you can speak with a financial adviser or insurance broker or even use Choosi’s adviser partner. You can then get tailored advice for your particular situation. When applying for life insurance through an adviser you may need to take a medical or blood test, and to complete some application forms.
This is general information and does not take into account your financial situation.
- Australian spending habits, MoneySmart
These articles are provided as reference material to allow more informed decision making, but are not intended as being a complete source of information on any topic. All readers should make their own independent analysis on the topic to make sure they have considered the aspects that are important to them.