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:
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:
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:
What do I do now? I hear you ask.
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Terrell Hyman the Director and Principal Advisor at Trl Financial Solutions.