02 May Do You Need Life Insurance?

We’d rather not have to think about it, but taking time to plan and protect yourself against life’s challenges is a better strategy.

We’ve all been in a conversation where we express relief that some tragic misfortune hasn’t yet crossed our path – be it a car crash, cancer, or other catastrophe.

Within seconds we usually follow it with a sharp rap of the knuckles upon a table or doorframe in an attempt to ward off the chance it might actually happen to us.

Child Magazines has teamed up with Savvy – BRW’s fastest growing financial company in 2015 to tell you how you can help protect yourself when life throws you an unexpected challenge.

What is life insurance?
Life insurance can help cover your expenses when emergencies resulting in injury or illness threaten your family’s livelihood.

Life insurance is an umbrella term that describes several different kinds of insurance policies for different situations. These include:

– Unexpected passing of a family member or diagnosis of a terminal condition (term life insurance)
– Becoming disabled and no longer being able to work (total and permanent disability insurance)
– Suffering a traumatic illness or injury (trauma insurance)
– Losing the ability to work for a short time due to illness or injury (income protection insurance)

When should I get insurance?
If you were to become injured or unwell to the point of being unable to earn an income, would your family be able to cope financially? If the answer is no, then getting life insurance is a good idea.

But I already have life insurance through my super fund.
Take some time to look at the policy you have through your super fund and work out if it suits your needs. Super fund insurance can often be a ‘one size fits all’ cover, and in many cases only applies in the event of death. The truth is, a lot of other things can impact your ability to support your family, and making sure you have the right type and amount of cover is critical.

How much coverage should I get?
That’s a very personal question. In short, you should get enough life insurance so that, if needed, your payout will enable you to pay your bills, cover your debts, and continue to support any dependent family members.

A useful exercise to determined how much cover you need is to work out what your assets are, compared to what you need to maintain your lifestyle, and use your insurance to cover that gap.

While we’d much rather not have to spend too long thinking about the potential struggles that our family might face down the line, taking the time to make the best choices for your life insurance can provide immeasurable peace of mind.

It certainly beats knocking on wood.

This article is brought to you by Savvy.

Founded in Australia in 2010, Savvy’s team of financial experts are dedicated to providing the best value finance and insurance deals in Australia.

Photography by Anna Kolosyuk