Life insurance, along with other personal insurances, is designed for the purpose of protecting you and your loved ones in the event that the unexpected occurs.
The unexpected is not something we like to think about, let alone plan for. But incorporating this extra level of protection into your financial plan provides you and your family peace of mind should the unthinkable occur.
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For Tracy, arranging life insurance and income protection insurance was a must with regards to her family’s future. Of course, she hoped there would never be a need to follow through with any claims on the different policies.
“I cannot begin to imagine how much harder everything would have been in losing Lindsay if the family faced financial uncertainty as well. Without insurance policies in place, I would have had to sell our home, return to full-time work and remove the girls from their existing school. My heart breaks for people out there in this situation. I know that the grief of losing your loved one is a heavy enough burden to bear without the added weight of financial worries.”
Read Tracey’s full story: Losing Life’s Great Love
Understand how a financial adviser can support you with your need for financial security. Get in touch.
What is life insurance?
Life insurance is an insurance policy that provides a lump sum of money to your nominated beneficiary in the event of your death.
In conjunction with other Personal Insurances in your financial plan in its entirety, your life cover should help to protect your family’s financial security after you pass.
Often referred to also as ‘death cover’ or ‘term life insurance’, some life cover policies will also provide a payout if you are diagnosed with a terminal illness with a limited life expectancy.
It’s important to note that life cover is different from accidental death insurance, which often has many exclusions and will only be paid out if your death occurs as a result of an accident.
To understand what is and is not included in your life cover policy, thoroughly read through the product disclosure statement.
Getting your life insurance in order may be a task collecting dust at the bottom of your to-do list but the difference it can make to lives of those left behind is worth making it a priority. You can find read some real insurance in action stories further down in the article.
How much protection do I need?
Deciding whether or not you need life cover and exactly how much you will need depends on a number of factors. As we move through life this amount will change, and it will be different for each individual.
Our Wealth Protection Philosophy guides how we recommend the level of cover you will require, the basic principle, however, is that the amount should provide your family with financial security should you become injured, disabled, ill or pass away.
A number of the factors we consider include:
- Your age
- What you currently earn
- What you currently owe (mortgages, loans, etc)
- Your current health risks
- Whether you have dependents
- If you are a business owner or employee
- Your personal view of risk and lifestyle goals
- Your current savings
Generally speaking, we look at your superannuation balance and projection, the sale of other investments and other outstanding income and support. Then we look at what you would need to pay or finalise like your mortgage, other debts, your children’s education and any other expenses. How much cover you will need is generally the gap between what you will receive from your superannuation payout and what you have left to pay off.
How Life Insurance fits inside your financial plan
Life cover is just one element that would be considered when building your financial plan. Like mentioned above, when considering life insurance, we also look at things like your superannuation, other investments and family commitments. Whether or not you require this type of insurance and the cover amount will depend on your stage of life and the previously mentioned factors.
Your financial plan exists to help you and your family live your best possible life and achieve your goals and dreams. In the unfortunate event of your death, you want your family to be financially secure and by providing them with a life cover payment you are helping to reduce the financial burden after you’re gone.
life insurance – what do you need, how insurance fits inside your financial plan.
Purchasing life insurance
If you work with a financial planner, they will be able to help you to determine the level of life insurance you will need and can help you through the process of finding and purchasing the right policy for you.
An amount of life cover is often included as part of your superannuation, so it is important to check the details around this.
Life insurance can be purchased as a stand-alone policy, or as a package with other personal insurances. If you do purchase life insurance in a package it’s important you check the PDS to see how the life cover amount may be impacted by claims on other elements within the package.
As with any insurance policy, the insurer will ask for a number of details before you are approved. Often, they will ask about your:
- Medical history
- Family medical history
- Lifestyle habits
- Other activity/hobby involvement
Your approval status, premium amounts and terms and conditions of the policy will rely on the information you provide about the above. Any dishonest or misleading information provided about the above may result in a claim being denied.
Making a life insurance claim
If you have worked with a financial planner to purchase your life insurance or other insurance policies, they are able to assist you in the process of making a claim. Just as it is our job to help you ensure you have the right policy and cover, we can help to make the claim process a lot easier in the unfortunate event that you need it.
We have helped a number of clients through all sorts of insurance claims.
Craig Sanderson was very grateful to have the right cover and our assistance to make a claim when he unexpectedly experienced a heart attack a number of years ago. Read his story: Matters of the Heart.
Dwayne, a builder, was injured in a snowboarding accident that left him unable to work for a few months. Luckily, he had Income Protection Insurance and was still able to support his family while he recovered. Read his story: The snowboarding safety net.
Nothing can prepare a family for losing a wonderful father too soon, for Tracy, there was some comfort knowing that losing her husband wasn’t going to mean financial instability. In her words “I know that the grief of losing your loved one is a heavy enough burden to bear without the added weight of financial worries.” Read her full story: Losing life’s great love
Planning for life’s unexpected events is never easy. To learn how we can assist you in wealth protection and insurance matters, read through our Wealth Protection Philosophy.
If you would like to talk to a financial planner about life insurance for yourself and your family, please get in touch.
What you need to know
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.