Do I Need Life Insurance?
When it comes to making the decision about life insurance, you need to think about your current expenses, debts and who depends on you for financial support. Life insurance is designed to look after your loved ones and dependants after you die, but it can also cover you if you become permanently disabled or suffer from a serious illness or injury that means you can’t return to work.
Who relies on you to support them? What would you be leaving behind? These are the questions you need to ask yourself when deciding if you need life insurance.
Who Needs Life Insurance Most?
Everybody should consider taking out an effective insurance plan to protect your loved ones and assets when you’re no longer around, but there are seven groups of people that need life insurance the most:
Couples
When you are married or in a de facto relationship, life insurance is required to support your spouse and their quality of life after one of you is gone or unable to continue financially contributing. In most cases, your mortgage and any loans you have are based on your combined household income, so you need to consider whether one of you would be able to cover those expenses – as well as ongoing bills and living costs – alone.
For most people, a single income would not be able to adequately cover these continuing expenses, and life and disability insurance can provide the surviving spouse with the financial protection they need to maintain their standard of living.
If you’re planning to have children, life insurance is even more important.
Couples with Kids
If your family unit is dependent on your income to meet daily living costs, then you need life and disability insurance as your income would need to be replaced in the event of your death or disability.
Having adequate life cover ensures your family would be able to continue to meet all their financial obligations as well as give your children the opportunities you want them to have in the future, such as a good education. Having life insurance means your family is taken care of and your plans for the future can stay intact, even if you’re not there.
Single Parents
As a single parent, you are the primary caregiver and breadwinner for your children. That means you are predominantly responsible for their wellbeing and future opportunities, and life and disability insurance is a vital part of safeguarding their financial future if you were suddenly unable to keep providing for them.
Having life cover will make sure your children will continue to be provided for on every level after you die or become permanently disabled, and give them the chance to have the future you want for them.
Stay-At-Home Parents
Financial contributions come in many forms other than just earning a salary. Stay-at-home parents are a vital part of a household, and your sudden death or disability would result in a large financial loss. Your contributions such as child care, transportation, caring for the home, cooking and other household activities would need to be replaced, and the value of this is often extremely underestimated.
While you may not need a life insurance policy as large as that of the primary income earner, stay-at-home parents should still be adequately covered to allow your family to maintain their quality of life after you’re gone.
Retirees
Life insurance is also important if you and your partner have grown children who no longer live at home, especially if you still have a mortgage. Even retired, your spouse will still need to continue to pay off your mortgage together with funding daily living expenses, and life cover means that they will be able to preserve the lifestyle you both worked hard to achieve.
Singles
You may not think you need life and disability insurance if you’re single and don’t have any dependents, but the fact is, there are a number of unexpected situations you may find yourself in where insurance is a necessity.
For example, in the event of your death, your debt is not forgotten. It would be passed on to surviving family members until they can pay it back. Will your estate have the resources to repay the debt? If not, you need life insurance. If you become disabled, will you continue to have the ability to service your debt? If not, you need disability insurance.
If you depend on your income to survive, then life insurance is also something you need to consider. If you do not have significant investment assets, you will need insurance to fund a replacement income if you become disabled and are unable to continue working to support yourself.
Small and Medium Sized Business Owners
In the event of the death or disability of a partner in a small or medium sized business, the remaining partner/s could be faced with the possibility of being in business with a spouse that knows nothing about the business. Life insurance on business partners, coupled with a well-drafted agreement, will provide the funding to purchase the shares of deceased or disabled shareholders.
Effectively structured insurance can also provide the funds to cover the financial loss suffered by a business following the death or disability of a key employee or partner. This loss could be significant and may include a loss of revenue as well as restrictions placed on credit supply.
Take Out Cover Today
Once you take out a life insurance plan, make sure you review your cover periodically to check that it continues to meet your needs. This is especially important when you have any sort of significant life change such as getting married, having children or after the death of a family member.
Contact the insurance specialists at Cover Australia today to discuss the best life insurance options for every stage of your life. We can deliver comprehensive insurance comparisons, expert advice and professional service for the life of your policy.
Get a free quote now.
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