12 Essentials to Look for in Your Life Cover – Part 1
A Two Part Guide to Ensure Your Cover is Right for You and Your Family
If you are looking to purchase or review your life insurance policy and not quite sure where to start, follow these few very simple tips to help you make an informed decision and obtain a competitively priced policy with adequate protection for your needs:
1. Consider your life insurance needs carefully
The first key step in buying life insurance is to fully understand what it is that you are looking to protect and match those needs with the right insurance product. If you are thinking of a policy that will provide financial assistance to your dependants in the event of your death, then you may want to consider term life cover.
If you are looking for financial protection in the event of a serious illness or injury, consider bundling your policy with trauma (for life-threatening medical events) or TPD insurance (for serious illness or injury that have rendered your ability to work again). Trauma and TPD insurance are both living insurance, which means that you don’t have to pass away before a benefit payment is received. Many insurance providers these days offer options to bundle your term life policy with additional trauma or TPD cover, especially if you are looking for a comprehensive protection package.
2. Coverage for your income
On the other hand, it is beneficial to consider income protection insurance as an extra layer of protection on top of your term life policy. Income protection covers you for when you are ill or injured and cannot work temporarily, and provides you with a replacement income so that you can keep up with your financial commitments.
If you have a small budget to start off with, take the time to consider with life insurance product is most suitable to your current stage of life. Alternatively, you can also consult with a financial planner or an insurance consultant to guide you in the right direction. A consultant can utilise their knowledge of the market and find the best premiums for your policies and discounts.
3. Calculate the right amount of cover
Figuring out the appropriate amount of life insurance that you may need is another essential step to ensure you have the right protection in place. It is easy to overcompensate for how much protection you really need for your situation and end up paying far too much in premiums. On the other hand, not having enough insurance can put you and your dependants at risk of underinsurance, which could put your family in significant financial hardship in the future.
It is essential to use a needs based approach to make sure you find an appropriate level of cover to ensure your family is able to maintain their current way of living:
4. Mortgage or rent: If you own your home, put aside an amount to pay off your mortgage or the number of years you want to cover rent for your dependants;
5. Daily living expenses: Consider the day-to-day expenses that your family will have to meet, such as:
- The cost of food
- Buying groceries
- Utility bills; electricity, water, gas, telecommunication
- Home maintenance
- Insurance premiums; health, car, home and contents insurance
6. Children’s education expenses: When putting aside an amount to cover your children’s education expenses, the number of children you have and their respective age should be taken into consideration.
Be sure to catch Part 2 of the 12 Essentials for Life Cover ….
Want to review or enquire about Life Cover? You can book a complimentary review session with Paul Douglas-Irving by clicking HERE…
Any advice provided in this publication should be considered General Advice as it does not take into account your personal needs and objectives or your financial circumstances. You should therefore consider these matters yourself before deciding whether the advice is appropriate for you and whether you should act upon it.