Death and insurance are topics that don't usually make for a fun conversation. Perhaps that's why many Australians shy away from the topic of life insurance - it can seem morbid to insure against your own death.
It's a conversation that we need to have though, because insurance can be essential in ensuring that life goes on and bills are paid for loved ones if the worst happens. With the goal of starting a conversation, and getting you thinking, we've put together a quick summary of basic life insurance cover.
Is your family covered if the unexpected occurs?
Term life cover
Term life cover (or death insurance) is what most people think of when they hear the words 'life insurance'. At their most basic these policies will pay a set amount to a beneficiary of your choice in the event of your passing - this will usually be a family member.
When taking out life insurance and deciding on an amount, Money Smart advises that it's essential you consider the following:
- Any debts you have,
- Your children's future child care and education costs and
- The amount of income your family need to live comfortably.
A death in the family is always a tragedy. However, with the right cover you can ensure that your loved ones don't add financial stress to their worries when you're gone.
Total and permanent disability cover
With the right cover you can ensure that your loved ones don't add financial stress to their worries when you're gone.
Serious injury and illness happens. If it does, it's often difficult for you to go on working, paying rent and providing for your family. This is where total and permanent disability insurance (TPDI) will save the day, helping to cover the costs of living, healthcare and rehabilitation.
This type of cover is almost always purchased with general life insurance, and will make sure you're taken care of if the unexpected does occur.
It's a claim that's fairly commonly used according to Australian Prudential Regulation Authority statistics, which show that over the first 9 months of September over $6 billion in death and disability claims were paid out.
Trauma covers you in the event that an illness or trauma renders you temporarily unable to work. It's not a permanent safeguard like TPDI, but a measure to smooth out the expenses and costs that occur when you become ill.
Life insurance isn't dark or morbid. It's about caring for your family even after your gone and ensuring that no matter what, they have what they need to live a full life. If you're considering taking out a policy and safeguarding your families future, seek professional financial advice before you commit.