What is life insurance?
Life insurance protects you or your family from financial difficulty after an unexpected event, like an illness, injury or death.
Life insurance (also known as term life) is a product that pays out a sum of money to your beneficiaries (you decide who these people are) in the event that any of the above incur. These funds can be used to help your family pay off debts (e.g. home loans, credit cards), send your kids to school, or act as additional savings for your partner’s retirement.
You sign an agreement when you take out life insurance and pay a fixed monthly premium.
Life insurance premiums are different for every person, as they are calculated based on your health, how you decide to structure your premiums, and much more. The professionals recommend you need 10 times what you would typically earn in a year.
Many working Australians have some life and disability insurance with their superannuation.
Types Of Life Insurance
A life insurance policy pays out a benefit to your family if the worst were to happen. Most Australians take out term life policies when they first have kids, and it’s important that they seek the right amount of cover.
Income protection pays regular (e.g. monthly) cash amounts of up to 75% of your income (salary + superannuation contribution) while you make a recovery from serious illness or injury. It’s invaluable cover for anyone who relies on a regular income.
Trauma cover provides cover if you are diagnosed with a certain illness has a significant impact on your life, such as cancer or a stroke. It is sometimes called ‘critical illness cover’ or ‘recovery insurance’.
You can compare life insurance policies here
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