Family Life Insurance
Each family differs, but it’s fair to say there is one common similarity. The wish for financial security. Protecting loved ones, if either parent were to pass away, is an important consideration when planning for your family’s financial security. Unfortunately, many Australian families are underinsured, or not insured at all, which could lead to a difficult financial future if the worst were to happen.
So, what life insurance products should I consider?
There are a range of life insurance products which can help provide financial security for a family. These include life cover, which pays a cash benefit to your beneficiaries if you were to pass away; Total & Permanent Disability products that pay a lump sum benefit if you are unable to work again due to sickness or injury; and Trauma products (sometimes known as critical illness) that pay a benefit to you if you were diagnosed with a serious medical condition listed in the cover terms.
Another worthwhile consideration Is Income Protection Insurance which pays a monthly benefit for your benefit period, if you can’t work due to illness or injury.
Choosing insurance cover to help protect your family often involves considering all of these types of cover.
Term Life Insurance Cover
Term Life Insurance Cover protects the cover holder for a defined level of cover, and is payable in the event of the death of the life insured, and in some cases (depending on the policy) their diagnosis with a terminal illness.
Total and Permanent Disability (TPD) Insurance
TPD is sometimes offered as stand alone cover, and sometimes (for example, in the case of NobleOak) as optional with Life Insurance. You are covered if you are unable to work ever again because of sickness or injury occurring after the cover starts. The proceeds can help you modify your home, replace lost income and clear debts.
At NobleOak, Trauma Insurance is available as an option with Life Insurance cover, or as a Stand Alone insurance. You are covered if you suffer a serious medical condition listed in the PDS. It can help you pay any excess treatment expenses and adjust your lifestyle. When taken as an option with Life Insurance cover, the Life Insurance cover amount is reduced by the amount of any trauma benefit paid.
Income Protection Insurance
Income Protection Insurance (also known as disability income insurance) can cover up to 75% of your income (maximum amounts apply) for your benefit period, in the event you cannot work due to sickness or injury. Income Protection helps support your family and cover essential living expenses.
Some of the benefits of Income Protection you may be entitled to:
- Partial Disablement Benefit is a reduced benefit if you return to work in a reduced capacity.
- Rehabilitation Expenses Benefit for additional expenses (recommended by your doctor) to help you to return to gainful employment such as special equipment and workplace modification.
Do I need life insurance?
This depends on your own situation. If life took a turn for the worse, Life Insurance may be suitable for a key breadwinner in the following types of family situations:
- Families with young children: having the means to maintain the lifestyle the children are accustomed to until fully independent.
- Families with older children and young adults: helping fund secondary school fees, university education, and other living costs.
- Those who have a mortgage and other debt; ensuring the mortgage repayments are made and other financial commitments are looked after.
How do I choose the right cover?
There are various types of Life Insurance products available containing cover types that may meet your short or long-term needs if you have a family. These include Life (death) cover, Total Permanent Disability cover, Trauma cover, and Income Protection insurance (also known as Disability Income cover).
Making a checklist for your own family situation can help when looking for suitable life insurance products. Items may include:
- you and your partner’s financial situation – current and future
- your age (and your partner’s age)
- you and your partner’s employment situation
- you and your partner’s lifestyle
- your outstanding mortgage and other financial commitments
- number of children
- your assets, savings, and superannuation balance
- any other life insurances you have.
What factors will affect my premiums?
There are several factors that affect the cost of your life insurance premiums. These include:
- the type of cover(s) and level of cover you wish to attain
- your age
- your gender
- your smoking status
- your health status and medical history
- your lifestyle (dangerous lifestyle attributes or occupations or may affect premiums)
When should I review my life insurance?
After you have chosen one or more life insurance products, it’s important to regularly check your policy to ensure it still provides suitable cover. Families often experience changes in life events – such as having more children, buying another home, taking on a larger mortgage – and it’s important to think about whether your cover levels are aligned these changes. With some of these events you may need to increase your level of cover, which can result in higher premiums, but this helps to ensure your family is adequately protected.
Will my family have to pay tax on the lump sum?
Most lump sum payments to your nominated beneficiaries in the event of a life cover claim are tax free. Sometimes there may be inheritance tax depending on the type of life insurance product and how it was set up. You may also set up a trust for your family. It is best to seek professional advice to determine your tax liabilities, and to consider trust regulations and estate planning.
Remember, life insurance may one of the most important financial decisions you can make. To find out more about NobleOak’s life insurance products or get a quote, call a NobleOak Life Australian based insurance specialist on 1300 014 494.