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Getting life insurance is one of the most important ways to protect you and your family. It is protection for the future and protection for your loved ones! Making sure that your loved ones are taken care of after you are gone is the ultimate goal of anyone looking into different life insurance policies.
Life insurance in Australia is a largely talked about product, but with so many insurance companies and products on offer, it can be quite confusing. We attempt to give a simple overview of life insurance in Australia.
Put simply, life insurance in an agreement that if you happen to die or are diagnosed with a terminal illness, a lump sum of money will be paid out to your named beneficiary. The beneficiary is usually your closest relatives such your immediate family.
Life insurance is ultimately protecting your family against the risk of you not being able to provide for them in the future. By taking out a life insurance policy you are making sure that they have enough money after you die or are unable to work.
Life insurance money can cover your debts so your family don’t have to suffer financial hardship if you are not there to make the repayments anymore. Life insurance will also cover other things such as making sure your family can maintain their standard of living well into the future.
A life insurance policy is a way to protect your family against the risk of the unknown; it will make sure that everyone you leave behind is well-taken care off once you are no longer there to provide for them.
Here we outline the most common types of life insurance in Australia
This is the most straightforward type of a life insurance.
A Term Life insurance policy pays a lump sum upon your death or on the diagnosis of a terminal illness.
The lump sum will be paid to your beneficiaries and will cover things such as paying off your accumulated debts and will help your family with the cost of ongoing living expenses in the future. It is a policy that has a term and will required to be renewed at the end of each term.
Total and Permanent Disability Insurance, known as TPD, pays out a lump sum of money if you permanently disabled and can no longer work.
This basically means that if you are no longer able to return to your usual occupation, or any occupation (this depends on the specific TPD policy that you have chosen), you will get a payout that you can use in any way you want.
For instance, you might use your TPD lump sum to pay off your debts, cover potential medical costs or even look to invest so that you have some sort of an annual income to help maintain your lifestyle.
This insurance policy pays a lump sum on the diagnosis or occurrence of one of a list of specific illnesses.
There are more than 50 conditions that qualify as trauma events, with the following being the most common causes for claims:
All of these conditions are very expensive to treat or recover from, which makes a Trauma Insurance policy very important to consider. It will enable you to still be able to pay for your living expenses and any financial debts while you are recovering so you don’t fall into financial hardship.
Income Protection Insurance provides a replacement income of up to 75% of the current income of the purchaser, if he or she becomes unable to work due to certain illness or injury.
Income Protection Insurance is sometimes referred to as ‘Income Replacement Insurance’, ‘Disability Income Insurance’ or ‘Salary Continuance Insurance’!
This insurance policy may cover you for both short and long periods. There are different types of policies that can be tailored to individual requirements. The waiting periods can differ across various policies also.
Depending on the particular type of Income Protection Insurance policy and the provider, monthly payments can continue up to the age of 65 in cases when the disability is ongoing or permanent and the purchaser of the policy no longer can work.
Purchasing a life insurance policy in Australia, particularly when you are purchasing it for the very first time, can be overwhelming. It is likely that you will come across multiple terms that you may not understand at first and it will be quite confusing.
We suggest to shop around and do your research, but it is a good good idea to talk to an insurance specialist to discuss your current cover, your perceived risks and then the right policy for you. There are plenty of financial advisors who can assist you in this area, so you are not stressed about your current situation and the future risks for your family.
We’ve put together some tips to assist you in finding the the right policy that meets your needs best, without the hassle.
Before you begin shopping around for an Australian insurance policy, it is crucial to understand what your family will need the life insurance money for. The main purpose of the life insurance policy is to provide financial support to your beneficiaries once you are no longer around to do so yourself. For example, do you have a debt that you would like to be paid if you are no longer around? It is important to look at things like your debts and any other expenses to ensure that you have enough cover to look after your loved ones in case something doesn’t go to plan.
In the end of the day, an Australian insurance policy can cost a lot of money and you want to make sure that it’s the right policy for your needs also for saving money. So careful research, planning and advice is needed.
You should always make sure that you understand what you are buying before you go ahead and buy it. This is particularly important when purchasing a life insurance policy in Australia.
There are multiple types of insurance policies out there and finding a suitable one is not always easy. So pick few that seem to fit your needs best and do your research. Read everything there is to read about it and consult real-life users. Do not forget to compare the policies and what they offer before purchasing any!
Ask your advisor for more information on the policies that they think will suit you, and before you part with your money make sure that you truly understand what you are purchasing and if it will meet your needs.
When comparing, don’t just compare the different types of insurance policies; compare the insurance providers, too.
There are multiple companies that offer insurance in Australia All of these different insurers offer different terms and conditions and have different life insurance quotes. Also there are a lot of review websites around that discuss the customer service of those companies. You want to make sure that when you or your family are making a claim, the that insurance company you choose is easy to deal with. It can be an emotional time and nobody wants the stress of bad customer service on top of it all! Sometimes this is an overlooked factor when selecting insurance. What happens when you make a claim!
So, before deciding, compare! Do your research and read as many user-reviews as possible!
Understanding the potential needs of your dependents and how long they will potentially need support for can help you estimate how much insurance you should pay for.
So, calculate not only your debts but think about how much each dependent might need annually. This is why speaking to a financial advisor can help. It’s better to have enough insurance cover to look after your family in the future.
One other thing to keep in mind is that many Australians already have life insurance cover through their superannuation fund. In many cases, that is simply not enough. Therefore, more and more people are taking out additional life insurance cover.
Doing the math is important, but the process itself is not always as easy as it sounds. Luckily, there are multiple reliable life insurance calculators out there that can do it all for you.
These calculators can assist you with life insurance in Australia in just a few clicks. They are generally very simple and easy to use and they provide reliable estimates in just seconds.
The calculators take into consideration the number of dependents and beneficiaries, the potential mortgages and the annual expenses of the family. Based on this data, they estimate how high the life insurance amount should be.
But in the end of the day they are just calculators, make sure that when you take out an insurance policy it suits your personal needs.
Purchasing a life insurance policy is a very important decision when it comes to managing any risks that might impact the future of your family. The decision to purchase a life insurance policy is not a one to be taken lightly. There are a lot of things to consider before making the final call to purchase the correct life insurance policy in Australia.
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