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Friday 15 May 2015
Friday 15 May 2015
Friday 15 May 2015
Friday 15 May 2015
“Expect the unexpected” may be a cliché, but life can be unpredictable. Relying on the hope that misfortune happens to someone else is a risky strategy when it comes to family protection. If you have people who depend on you, life cover is worth serious consideration.
Protecting My Family – Every Parent’s Priority
When creating a financial plan, it’s natural to focus on immediate needs rather than long-term risks. People often prepare for challenges like unemployment but overlook less common events, such as the death of a younger adult.
The good news is that insurers recognise younger, healthy individuals are at lower risk of death, which typically results in lower insurance premiums.
Understand What You Need – and What You Can Afford
The starting point for life insurance is understanding the minimum level of cover you need to protect your loved ones. This isn’t just about replacing income – it also includes covering the contributions of non-earning family members. For example:
Home-makers: The cost of childcare, cleaning, and meal preparation if they are no longer there.
Care-givers: Expenses for professional care if required.
Balancing Needs and Affordability
If you can afford more than the minimum, additional cover can make life more comfortable for those left behind.
If your budget is tight, having some cover is far better than having none at all.
Should you identify a shortfall, consider reviewing your expenses to see if adjustments can help you afford the essential protection your family needs.
Choosing the Right Type of Cover
1. Whole-of-Life Cover vs Term Assurance
Whole-of-Life Cover:
Provides cover indefinitely as long as premiums are paid.
Guarantees a pay-out to beneficiaries.
Term Assurance:
Covers you for a fixed period (the “term”).
If you die within the term, your beneficiaries receive a pay-out. If not, the policy expires.
Tip: Term assurance is typically less expensive than whole-of-life cover, making it a more affordable option for many.
2. Level of Cover Over Time
Ask yourself if your need for cover will change in the future:
Decreasing Cover: Suitable for covering debts like a mortgage, which reduce over time.
Increasing Cover: Designed to keep pace with inflation, ideal for providing long-term support for young children.
Choosing the right policy depends on your personal circumstances and financial goals.
The Importance of Trusts
Whatever type of life cover you choose, you might want to consider placing the policy in a trust.
Why Use a Trust?
Bypasses Probate: Ensures the pay-out reaches beneficiaries quickly, rather than being delayed by probate proceedings.
Protects the Pay-out: Separates the policy proceeds from the rest of your estate.
In short, setting up a trust can make a difficult time much easier for your loved ones.
Final Thoughts
Life insurance isn’t about predicting the future – it’s about ensuring that your family is protected, no matter what happens. By assessing your needs, balancing affordability, and choosing the right type of cover, you can create a financial safety net that gives you peace of mind.
For personalised advice on life cover and trust options, consulting a qualified financial adviser is a wise step.
“Expect the unexpected” may be a cliché, but life can be unpredictable. Relying on the hope that misfortune happens to someone else is a risky strategy when it comes to family protection. If you have people who depend on you, life cover is worth serious consideration.
Protecting My Family – Every Parent’s Priority
When creating a financial plan, it’s natural to focus on immediate needs rather than long-term risks. People often prepare for challenges like unemployment but overlook less common events, such as the death of a younger adult.
The good news is that insurers recognise younger, healthy individuals are at lower risk of death, which typically results in lower insurance premiums.
Understand What You Need – and What You Can Afford
The starting point for life insurance is understanding the minimum level of cover you need to protect your loved ones. This isn’t just about replacing income – it also includes covering the contributions of non-earning family members. For example:
Home-makers: The cost of childcare, cleaning, and meal preparation if they are no longer there.
Care-givers: Expenses for professional care if required.
Balancing Needs and Affordability
If you can afford more than the minimum, additional cover can make life more comfortable for those left behind.
If your budget is tight, having some cover is far better than having none at all.
Should you identify a shortfall, consider reviewing your expenses to see if adjustments can help you afford the essential protection your family needs.
Choosing the Right Type of Cover
1. Whole-of-Life Cover vs Term Assurance
Whole-of-Life Cover:
Provides cover indefinitely as long as premiums are paid.
Guarantees a pay-out to beneficiaries.
Term Assurance:
Covers you for a fixed period (the “term”).
If you die within the term, your beneficiaries receive a pay-out. If not, the policy expires.
Tip: Term assurance is typically less expensive than whole-of-life cover, making it a more affordable option for many.
2. Level of Cover Over Time
Ask yourself if your need for cover will change in the future:
Decreasing Cover: Suitable for covering debts like a mortgage, which reduce over time.
Increasing Cover: Designed to keep pace with inflation, ideal for providing long-term support for young children.
Choosing the right policy depends on your personal circumstances and financial goals.
The Importance of Trusts
Whatever type of life cover you choose, you might want to consider placing the policy in a trust.
Why Use a Trust?
Bypasses Probate: Ensures the pay-out reaches beneficiaries quickly, rather than being delayed by probate proceedings.
Protects the Pay-out: Separates the policy proceeds from the rest of your estate.
In short, setting up a trust can make a difficult time much easier for your loved ones.
Final Thoughts
Life insurance isn’t about predicting the future – it’s about ensuring that your family is protected, no matter what happens. By assessing your needs, balancing affordability, and choosing the right type of cover, you can create a financial safety net that gives you peace of mind.
For personalised advice on life cover and trust options, consulting a qualified financial adviser is a wise step.
