Life Insurance is an insurance cover that provides a benefit in the event of your death, or becoming terminally ill, payable to your chosen nominee/s.
Why should you get life insurance?
Life insurance is a simple way to protect your family and give you peace of mind. Your cover amount can be tailored with your goals in mind, whether this be to pay out your mortgage or provide an inheritance for your children. It can ensure that your family are able to continue their quality of life in the event of your passing.
What is the difference between super-held Life Insurance and retail Life Insurance?
Super-held Life Insurance, or insurance within your superannuation fund, is also known as group insurance. This means that your insurance cover is held within a bulk insurance policy along with other super fund members. Typically, super-held insurance cover is not underwritten, and you do not have to go through an application process or health tests to gain cover. Because of this, super-held insurance cover is of a generic nature and cover amounts are not tailored to your specific needs (e.g. paying out your mortgage). Life insurance cover amounts generally decrease as you age, and insurance premiums are paid straight from your superannuation balance. Terms and conditions of the group cover can be varied at any time, which may lead to complications in the event of you wanting to make a claim.
Retail Life Insurance, on the other hand, is cover specifically tailored to the individual. Your cover amount can be elected by you to reflect your personal needs – your debt level, your mortgage, enough to replace your income from your current age to retirement. Retail cover is underwritten at the time of your application, and therefore the terms and conditions of your insurance are set at this time. You can elect to pay for your retail life cover using your superannuation balance or your cashflow; some insurers also have policies that allow for a mixture of both payments. Your retail life cover amount can also be set up to increase as you age to reflect changes in the consumer price index or inflation.
When should I look at getting Life Insurance?
Life cover can be considered at any age, however, on a general basis, most people look at getting cover at specific points in their life, for instance when they are starting a family or signing on for a large amount of debt such as when buying a new home. Talk to your financial adviser about when would be right for you.