Life Insurance

We like to think ‘it will never happen to us’. But the reality is, some of us will pass on sooner than expected – leaving family and loved ones behind.
Should misfortune occur, could your loved ones survive without you? How would they pay the monthly bills? Or keep up with mortgage repayments?

One strategy is to take out appropriate Life Insurance to transfer the risk of taking care of your loved ones financially to an insurance company if you do not have the assets or capital available.

The risks

Our apologies in advance for the morbid nature of what follows but sometimes it is good to face the facts and take a reality check.

On average, there is one death in Australia every three minutes and 36 seconds.

One in three women and one in four men will be diagnosed with a malignant cancer in their lifetime.

Over 1,600 people die on Australian roads every year, most aged 26 – 59 years.

Cardiovascular disease claims nearly 50,000 lives per year, representing 34% of all deaths.

The reality

Life Cover provides financial protection to those you care for most. Should the worst happen, it pays a lump sum benefit to your loved ones.

Still, many Australians don’t take out insurance protection because of some common misconceptions may apply such as:

“I’ll be covered under Workers Compensation”

“I have enough savings” – 60% of families with dependents will run out of money within a year if the breadwinner dies.

“My Life Cover in my default super fund will suffice” – Life Cover inside super only represents 20% of the cover required.

“ It doesn’t matter; I’m not the main income earner” – Child care and home help provided by a ‘stay-at-home’ spouse could be worth more than $75,000 per year.

What is Life Cover?

Life Cover pays a lump sum amount in the event of your death – helping protect your loved ones’ lifestyle and future. It is essential for those with family or other financial commitments

What are the cover features?

Here are just some of the features you can expect with Life Cover:

• Early payment: If you’re diagnosed as terminally ill, you are unlikely to be working which means less house hold income. You may therefore be eligible for early payment.

What are the cover options?

Here are just some of the options you can expect with Life Cover:

• Inside or outside super: You may be able to hold your Life Cover inside super and pay premiums using pre-tax dollars. There are often restrictions however, so it’s important you talk to your financial adviser or complete the contact form on this web site.
• Choice of premium options: ‘Stepped’ premiums increase each year in line with your age, while ‘Level’ premiums remain relatively constant until age 65 (subject to insurer terms and conditions).

What do the payments protect?

Having a suitable level of cover will help your family survive without you. The benefit payment can be used to meet the following expenses.

• Mortgage repayments – Help with funds available to protect the family home.
• Day-to-day expenses – Those everyday bills might not seem like too much of a burden, but they can really add up. Would your family be able to cover living expenses such as food, clothing and schooling without you?
• Children’s future – The cost of raising a family is significant. Life Cover can help your children have the schooling and upbringing you would want for them, if you weren’t there.
• Retirement protection – The lump sum payment means your loved ones’ retirement savings will be there when you need them.
• Funeral costs – Your family may use part of the benefit to pay for the significant cost of a funeral.

The benefits of protection

In 2010 alone, $1.629 billion in Life Cover claims for Australians in the market place aged 21 – 100.

Causes of claim

• Cancer – 32%
• Heart Disease/Stroke – 20%
• Accident/Injury – 2%
• Respiratory – 10%
• Liver Disease – 1%
• Other – 35%.

i ABS (2011) Population Clock, www.abs.gov.au/ausstats/abs, viewed 12 March 2012 ii AIH W (2008) Cancer in Australia: an overview 2008, Cancer series no. 46, Cat. no. CAN 42, Canberra iii Australian Government (August 2008) Road Deaths Australia: 2007 Statistical Summary, Road safety report no.1 Department of Infrastructure, Transport, Regional Development and Local Government, Canberra iv AIH W (2011) Cardiovascular disease: Australian facts 2011, Cardiovascular disease series no. 35, Cat. no. CVD 53, Canberra v IFS A (2005) A Nation Exposed: Investigating the Issue of Underinsurance in Australia, Research study commissioned by IFS A and conducted by Rice Walker Actuaries and TNS Australia, Sydney vi IFS A (2005) A Nation Exposed: Investigating the Issue of Underinsurance in Australia, Research study commissioned by IFS A and conducted by Rice Walker Actuaries and TNS Australia, Sydney vii IFS A (5 October 2005) Australian mothers – undervalued and underinsured, Media release, Sydney viii. The figures shown represent actual claims paid by AMP , Asteron, AXA, BT, CommInsure, OnePath, Macquarie, ML C TAL & Zurich from 1 January 2010 to 31 December 2010.