Monday, 22 June 2015

Why Life Insurance Can Be a Good Idea For Families...

*This post is brought to you in collaboration with Life Insurance Comparison.

There have been countless times when we have considered life insurance and income protection insurance for our family. It is something seriously worth looking into when you have young children to care for and a hefty mortgage and education costs to contend with.

I am so pleased to welcome Sally with this guest post on behalf of Life Insurance Comparison, which spells out the benefits of these types of insurance options for families, without the difficult jargon so often associated with insurance.

For many families, life insurance isn't very high on the priority list and may seem like an irrelevant and extravagant purchase if you are not fully aware of the benefits. In reality, life insurance can be much more important than you might think for families. Essentially, it is a way to protect at least part of your family's income against unexpected scenarios that could otherwise result in debt and financial hardship. Here's why your family may want to think about buying life insurance.

Why have life insurance?

The biggest benefit of life insurance is to ensure that there will still be some income to depend on, even if the main earner in the household dies or is no longer able to work due to ill health. In this situation, it's likely that your family income would be severely compromised or disappear completely - making for a much lower quality of life. As a worst case scenario, you could find yourself with significant debt or even be made homeless if you can't keep up with rent or mortgage payments.

Most people don't have enough life insurance attached to their superannuation fund to see them through for very long and there is only limited support available from the Australian Government. Without considerable savings to fall back on, most families would find themselves in a big mess financially if the breadwinner is no longer able to earn.

Thinking about how you would cope without your family's main source of income can be a major source of anxiety and many households do not realise that having life insurance can take away this type of stress by replacing the majority of the policyholder's income.

As well as general life insurance, there are several other options:

Income Protection will cover up to 75 per cent of the policyholder's income if they become seriously ill and cannot work, or die. This form of life insurance will provide regular monthly income for your family that can be used to meet outgoings and everyday living expenses and is one of the most popular options.

Critical Illness insurance and Trauma insurance pay out in the form of a lump sum for beneficiaries if the policyholder is diagnosed with a condition that is covered by the policy.

Total and Permanent Disability (TPD) insurance pays out if the policyholder becomes disabled and cannot work.

It makes sense to have a life insurance policy for the main breadwinner in the family but you can also look to insure both parents. This is the case even if one parent is only working part-time or stays at home with the children. Although they may not be earning the bulk of the income, their contribution to the household is invaluable in other ways and would be expensive and difficult to replace.

Buying Life Insurance

Whereas health insurance is community rated and health funds cannot charge more for premiums on medical grounds, this is not the case for life insurance. Because health and lifestyle factors can affect your likelihood of becoming seriously ill or dying, you can expect to pay more for life insurance cover if you are considered to be 'high risk' for making a claim. Your medical history will be a big culprit in this, as well as factors such as your occupation, age and whether you are a smoker or drink alcohol.

Check out a few different life insurance policies now at LifeInsuranceComparison. We compare life insurance policies from all 12 of Australia's major underwritten insurers. Let us help you find peace of mind at the right price!

Have you ever considered life insurance for your family?
Recent posts on Six Little Hearts you may have missed:

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  1. A timely post. With hubby heading to sea so often, I'm needing to really look hard at his life insurance and determine if anything does happen, we are covered.

    1. It's a tricky thing to navigate and I have always been put off by all the legal wording but I love that this piece really explains it in plain English. Good luck with your situation.

  2. We've always had life insurance, contents insurance, income protection insurance, even pet insurance! You never know what is around the corner! :-)

  3. I have life insurance built in with my super fund, so for the time being I am fine. Hubby is the same, but we have the extra insurance for his income and in case he becomes disabled and not able to work. We have just gone through our insurances and made sure we are up to date and covered in the best way we can. Most people are unaware they already have life insurance with their super fund and don't need another fund.

    1. You are organised and I admire that. I have not given much of a glance over our inclusions and exclusions but clearly I need to sit and do some homework.

  4. I have life insurance and I also have insurance for my son just in case he gets sick, the insurance covers the cost of hospital and specialists that health insurance doesn't cover. I've been asking my hubby to take it out because I can't do it for him!

    1. Good one Eva. We have no insurance and should probably look into it (outside of house and contents and vehicle that is).


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