Life Insurance is a lump sum payment that the dependants of a deceased insured person will receive. This money can be used for burial expenses or for debts that the deceased person has left. The insurance money can also be used for investments and other personal expenses.
It’s important for a lot of reasons.
• If you pass away it pays out all your debts
• The best time to take it is when you are young fit and healthy as the premiums will be lower
• It will look after your family
• Peace of mind
The life insurance premium relies on a lot of factors, including risk factors in your line of work and lifestyle. They also consider personal health histories such as smoking and drinking.
Many super funds include a life policy but you check if the default cover satisfies your family’s needs. You can ask for a statement which reflects the amount of your insurance and a product disclosure statement which details the policy guidelines. Also, check if the policy has restrictions for dangerous work, part-time work, maternity leave and age.
If you apply for separate cover make sure you get the right mix. While the premium of the term life insurance is not tax-deductible, the benefit payout is tax-free. Also, the cover is renewable once your term life insurance is active. This means that the benefit will only stop if you stop paying the premium. If you have suffered an injury or illness, your cover is still active.
It is important to find the insurance deal that will cover the needs of your family. To do this, you can consider how long your financial commitments will last. Then, you can seek the help of a financial adviser who will determine the right term for you based on your existing debts, the future costs for education of your children, your current income and potential purchases in the future.
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