You’ve Just Had a Baby – Here’s How Life Insurance Policies Work
The birth of a child is such a happy event – but it also means added responsibilities. Life insurance can help to secure your family’s future.
The birth of a child is such a fulfilling moment in a person’s life. But as adorable as they are, children definitely come with a lot of new responsibilities.
You now have a new responsibility that you need to take care of. You start thinking about all the possible outcomes and of course, you think of the worst.
What if you were to pass away? The joyful addition suddenly turns into concern.
The stats bear it out too. More than 8,500 Australian parents, men and women, who are between the ages of 25 and 50 pass away every year.
Such was the tragic story of Paul Taylor. A middle-aged man, Taylor was nevertheless in top shape when he lost his life in a surfing accident while on a family vacation. He left behind his wife, 15-year-old daughter, and 12-year-old son.
The consequences of Paul’s death extended far beyond the emotional.
They’d just moved into a new family home and were planning on sending the children to a private school.
However, in the aftermath of Paul’s death, everything changed. His widow had to sell the family home and move to a smaller house as she couldn’t keep up with the mortgage payments.
The children enrolled in a public school instead. On top of the family tragedy, the sudden drop in lifestyle and environmental added to the emotional strain.
Paul and his wife neglected one thing. Had they been properly insured they could have prevented this.
What Is Life Insurance (And What Can It Cover?)
Life insurance provides you with financial security in the event of the unexpected.
You’ve read above how a family tragedy can have disastrous ramifications for everyone involved.
A sudden change in financial standing can severely affect your family. This can bring a range of adverse outcomes to pile on top of the tragedy.
All of that can have long-term and permanent effects on the survivors. Especially if the family doesn’t have enough time and financial security to grieve and cope with the loss.
With the purchase of a life insurance policy, you can secure your family’s future. If anything happens to you, you know that your family will have something to fall back on.
However, this doesn’t only apply to loss of life. There are types of life insurance that cover:
- Total and Permanent Disability (TPD) – In this case, you would receive a lump sum cash payment, if an injury or illness resulted in you never working again.
- Income protection – If an injury or illness prevents you from working, the policy will make up a portion of your income.
- Trauma – The policy pays a lump sum if you’re diagnosed with a critical illness.
Therefore, there are plenty of reasons to consider a life insurance policy. But before you begin your search, you may want to check if you already have one.
For instance, you may already have a life insurance cover through your superannuation fund. Make sure to look into that or you may end up with multiple policies, which is actually permitted, though it may be a waste of money.
How Can You Get a Policy?
You can obtain an insurance policy in three different ways in Australia.
#1 – Through a Financial Advisor
Working with a Financial Advisor means that person is licenced to recommend and provide advice on the policy for you. For many people this is a preferred route as it makes it easier for them – someone else does the leg work. However, it can take some time to be approved and can be more expensive.
#2 – Direct
Some people like to exclude advisors and other middlemen from their search. They prefer to find a policy on their own.
If you prefer to do it on your own, there’s no need to involve a Financial Advisor. But in that case, you’ll need to be careful in your search. Many direct insurers do not offer fully underwritten cover, and instead will underwrite you at the point of claim. This means you could spend years paying your premiums in good faith and then be denied at the point of claim due to exclusions.
NobleOak is one of the only direct life insurers in Australia that differs in this way, asking you a few more questions at the point of application to fully underwrite you so there will be no surprises in the event of a claim.
#3 – Getting Life Insurance Through Your Super
Most superannuation funds offer life insurance as part of the deal. As a result, over half of all Australians have life insurance through their super.
This type of life insurance may be cheaper but comes with some drawbacks.
To begin with, the policies are generic. Therefore, you may not be able to create a policy that suits your own needs and you may risk underinsurance.
If you were to claim there is also a more complicated process to attain the funds as they are passed through your superannuation fund or trustee.
The Importance of Renewing Your Policy
The first time you purchase a life insurance policy, you do it according to your current personal situation. However, as time goes by naturally, a lot of circumstances may change.
Let’s say you welcomed a new family member or bought a bigger house. In insurance terms, these are trigger events that call for you to revaluate your financial situation.
Your family may need more insurance cover if the mortgage payments are higher and you’ve added another dependent.
Will the current insurance policy be enough to cover all these costs?
Other trigger events may include getting a raise, changing jobs, or moving interstate or abroad
Whatever the change in circumstances, you shouldn’t leave anything to chance.
The Future Is Bright
A happy event should never be a reason to worry. Yet, greater responsibility isn’t going to make things easier.
With an adequate life insurance policy, you’ll be able to enjoy the birth of a new child or buying a new house without thinking of the worst.
If you haven’t already, it may be in your best interest to look for a life insurance policy right away.
And Noble Oak might be just the place to start.We are an award-winning insurance company that can tailor a policy to fit your needs.
Get a quote and see how much you could save on your life insurance.