Is it time you had a look at Life Insurance?
By Matt Ireland, Evolution Financial Planning team.
You would have heard the term countless times before, or maybe even seen it on your super statement, but often times the value of life insurance is difficult to understand. Life cover is a simple financial product that will pay your family a sum of money if you were to pass away. Most policies are relatively similar, however there are some terms and conditions to watch out for.
It can be hard to justify paying for life insurance as it’s ideally something that you will never have to use. However the security it provides can drastically improve the quality of life of your loved ones. It can help to have an honest conversation about your finances and take a realistic approach to meeting your family’s needs.
You need to consider more than just your current mortgage or car loans. Do you have young children to raise and educate? Will your partner continue to work in your absence or will they take some time off? Will you need to hire a nanny if you continue to work?
How does life insurance ownership work?
You can apply for life insurance both outside of super as well as within your super fund. Owning the policy inside super can help with your cash flow as you won’t pay any premiums from your pocket directly. However, recurring premiums can reduce your overall super balance at retirement if you’re not wary.
Sometimes Super funds decide to automatically give their members default cover. You often do not have to actually apply to be given this insurance. This is a basic level of cover that doesn’t require you to undergo any medical tests or health checks. These policies can be inexpensive and beneficial to some, however many have complex terms and conditions that you need to be aware of.
You may also choose to apply for a customised level of cover and have to undergo a process called underwriting. This process involves medical checks and health questionnaires that are aimed at assessing the likelihood that you will make a claim on your insurance. These policies are often far more comprehensive however underwriting can sometimes result in extra charges or certain medical issues being excluded from the policy.
You need to choose your insurance provider carefully and the likelihood that the company will still be around when you need to claim should be considered.
If you would like to sit down for an open conversation about your insurance needs please feel free to enquire about an appointment with one of Evolution’s Financial Advisers.