If you think of insurance as protection for the things that matter most, it makes sense to insure your valuable assets that cost the most to replace, such as your home, car and home contents. But what about the most important asset you have? Your life.
Many financial experts see life insurance as the foundation of any sensible financial planning. And, to help your family get through some of life’s challenging situations, it can be an all-important safeguard.
We don’t like to think about the finality of life but, for the benefit of those we love, life insurance can be beneficial for you to:
Replace income for dependents
When you have other people depending on your income, life insurance can be the financial security you need, in order to know they are looked after – even when you are no longer around to provide for them.
For parents with young children, investing in life insurance is an investment in their secure financial future, as it gives them the protection of having money to draw on to support their future needs, with provision for replacing your income, should you pass away.
It’s not only the children who can benefit. In the case of a partnership, if the surviving partner would be in financial stress without access to a second income, life insurance can provide a pay-out to the surviving partner, or can also be set up to make provisions for adult parents who may be financially dependent on the income of an adult child.
Cover all final expenses
The costs of arranging a funeral can be high and with other legal issues, such as specialist probate lawyers and estate administration costs, plus any medical expenses that are not covered by private health insurance, the bills left behind after a loved one’s death can be overwhelming.
Provide an inheritance to people you love
You might not have lots of assets but you can still provide an inheritance to your heirs by taking out a life insurance policy that lists them as beneficiaries.
Donate to your favourite charity
If your loved ones don’t need your inheritance, or you have no relatives or close friends to leave your estate to, a life insurance policy that lists your favourite charity as a beneficiary can be a wonderful way to support a cause dear to your heart. Sure, you may choose, instead, to donate the cash equivalent of the policy’s annual premiums each year, but the reality is that the insurance pay-out after your death will provide the charity you love with a much greater financial gift.
Protect Your Income
Insurance isn’t just about death cover, depending on your own personal circumstances and risk assessment related to your ongoing ability to keep earning a steady income, you may wish to also make a provision for income protection insurance. If you run your own business and generate an income that people you love rely on, investing in this type of insurance can offer peace of mind that protects your family by providing a nominated percentage of your income if you suffer the negative impact of accident or illness that prevents you from working.
Whether or not you make the decision to add the cost of income protection to your ongoing insurance premiums is something to discuss with your accountant and a trusted financial planner but it’s important to crunch your numbers and weigh up the financial risks you could face without it in place. If having the insurance is a sure-fire way of delivering increased peace of mind, with a view to a less stressful future, then it might truly be money well spent that you’ll never regret.
For family members who will need to continue making payments towards home loans, personal loans or car loans – even after you are deceased or unable to work to provide an income – it’s insurance that builds a solid foundation of a strong financial future, without the stress of worrying where the next monthly repayment is coming from.
Just be sure that, if you do decide to go ahead with it, you are honest with your calculations about how much income you would need to replace each week. Any insurance policy that pays out less than what you really need to survive is not doing you any life-changing favours.
Of course, no matter what type of insurance policy you believe is right for you – from landlord’s insurance designed to protect property investors, to private health insurance, or public liability insurance – it’s critical to read the fine print to gain a thorough understanding of the policy’s inclusions…and potential exclusions.
For more information about the best possible insurance policies to protect your family’s future financial security, make sure you understand the full picture of your personal financial circumstances by asking for support from our Lending Specialists team today.