Life insurance will prepare you for family emergencies. Without it, your family and next of kin would be devastated – both emotionally and financially. Imagine what it would be like if you were taken ill and couldn’t work, or if you died. Would you or your dependents be able to survive?
Being unable to earn an income as a result of ill-health or an accident could expose your family and you to financial ruin. With life insurance, you will get the money required to keep you afloat.
If you already have insurance, you should review the cover regularly. This is especially so when something in your life changes – such as if you started a business, have kids, or you took out a home loan.
In this guide, you will learn more about life insurance, what it entails, and why you need it. Read on to find out more:
Types of Insurance
Before signing up for life insurance in Perth, you must understand how each policy works, what it includes, and what it excludes. That said, there are many different types of cover. Depending on your personal circumstances, you need one or more of the following:
- Life Cover
Commonly referred to as death cover or term life insurance, life cover will pay your next of kin for a specific amount of time after your untimely death.
- TPD (Total and Permanent Disability) Cover
This type of insurance will pay a lump sum to help you with living and rehabilitation costs if you are permanently and totally disabled. Insurers typically bundle it together with life cover.
- Trauma Cover
Trauma cover will protect if you are diagnosed with specific injuries and illnesses. The policy includes the major injuries/illnesses that will significantly impact your life – such as a stroke or cancer. At times, it is referred to as recovery insurance or critical illness cover.
- Income Protection
Another type of life insurance, income protection will replace the earnings you lose due to your inability to get meaningful employment due to sickness or injury.
How Much Insurance Do You Need?
If your insurance is offered by a super fund, it will be cheaper than if you go to another provider. However, you still need to shop around until you find a policy that perfectly suits your needs.
There is no absolute right answer to the question: “How much insurance do I need?” That said, the more the insurance you get, the greater the level of protection you (and your beneficiaries) will enjoy.
The level of cover you sign up for will also depend on your income and what your financial situation can allow. Therefore, the best thing to do would be to prioritise. To arrive at the right level of insurance for your particular needs, consider the following:
a) Family Income
Think about the amount of money your family will have should you become disabled or if you were to die. Calculate your savings, as well as the amount you’ve stored up in existing insurance policies, shares, and superannuation.
Next, think about the level of paid leave you get and the kind of support your family would be able to provide. Remember, you might be entitled to workers’ compensation and/or government benefits if you were to get injured. However, these compensations might also be reduced if you have income protection claims.
b) Family Expenses
You should also consider the amount of money your family will need in case the worst happens. While calculating this figure, consider the size of all your debts, mortgage payments, as well as education, childcare, and any other cost you have to meet.
The difference between (a) and (b) above is the amount of life insurance cover you ought to get. Still, you might have to compromise between what your family can afford and what you would like.
Before you compare policies from different providers, check if your super fund already provides life insurance. You might find that you already have the cover you require.
Of course, changes in your lifestyle might force you to modify the level of protection you receive. For instance, if you have a large mortgage and children, you may consider getting more cover. Similarly, if no one depends on you any more or if you’ve cleared your mortgage, you might want to reduce your Perth life insurance cover.
Over and above everything else, you cannot afford to continue going on as you do without proper life insurance cover. Choose an option that suits your present circumstances and review it against your changing needs every once in a while. Find more information here: https://www.truelocal.com.au/business/life-insurance-perth/osborne-park