Part 1 - What is Life Insurance?

Often called Term Life Insurance or Death Cover, this insurance provides a predesignated amount of money as a lump sum when you die or are diagnosed as terminally ill (if you are diagnosed with a terminal illness with a limited life expectancy). This lump sum goes to your nominated beneficiaries on the policy, if you have made a nomination, or, if it is through your super and no nomination has been made, it will be up to the trustee of the superannuation fund to determine who gets the money.

That is a very general description of life insurance, but it it is important to dig a bit deeper to see what it actually does for you or your family if you die or are diagnosed with a terminal illness.
If you were no longer here to support them:

• Would your loved ones have to sell the family home to pay off debts?
• Would your partner need to look at a second job just to pay the bills?
• Would your kids need to move schools because your partner can’t afford the fees?

When determining how much life insurance you should have you need to think about what kind of life you want to leave your loved ones if anything happened to you. Do you really want them worrying about bills, school fees, or supporting their living expenses at a time when they should be able to mourn? Do you want to have them dramatically change their lifestyles because you are no longer able to support them?

I hear you say, “Wait, but I have life insurance in my super”.

Yes, you may have some level of cover in your super but when was the last time you looked at how much you are insured for, and does that really cover everything that needs to be covered?
Once you have completed calculating your insurance needs after asking yourself these questions then it is a matter of how you will pay for this insurance. There are different ways of owning a life insurance policy, the two main, and most common, are:
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1. Owning it in your own name and paying the premiums from your bank account or credit card.
2. The most common way most Australians have life insurance is through your superannuation fund. This is the most common because:

• Nearly all superannuation funds come with some default level of life cover attached to them, and;
• You don’t actually have to pay for the premiums out-of-pocket as they are deducted from your superannuation fund.

Now obviously if you are looking at increasing your level of cover you need to determine if the policy you have is right for you. Things you should look when comparing policies are:

• The benefits and policy features (especially the terminal illness benefit)
• Exclusions
• The different waiting periods before you can claim
• Limitations of the cover
• The cost of the policy – both now and in the future

What do I do now? I hear you ask.

• Well, you could do some calculations about what cover you need, source a company with a policy that matches your needs and budget, work out how you want to pay for the life insurance then go ahead and apply to the company directly. Or;
• You could book an appointment with me to review all your existing insurances and receive a professional recommendation to ensure you have the right level of cover.

OR

• You could click the hyperlink to get a FREE copy of my "The 12 Biggest Mistakes People Make With Their Personal Insurances. And How To Avoid Them" eBook. This book will give you a great understanding of the most common mistakes people make when getting their insurances sorted and how best to avoid them, so you don't repeat their mistakes. There is an old saying, "You should always learn from your mistakes," but isn't it better when you get to learn from other people's mistakes!

​And don't forget to follow me on my socials for regular updates in the industry as well as tips and tricks to help you manage your finances better.