They never day life insurance… ask people what their biggest asset is, and most will name their home, or perhaps their superannuation or investment portfolio. But this mistake could cost people dearly.
For most people, the most important asset is their ability to earn income for the remainder of their working life. The average 30 year old earning $100,000 a year right now can reasonably expect to earn over $5.5 million by the time they retire at 65 (assuming income growth at a steady 2.5 percent a year).
But while most people insure their car or home against loss or damage without a second thought, many people leave themselves completely unprotected against the accidents and illnesses that can happen to anyone, and financial security could be lost overnight.
If your ability to go to work and earn an income suddenly disappears, then not only is the house and car likely to disappear, but everyday living expenses – such as putting food on the table, paying your utilities and other bills, providing schooling or care for your kids – are also put at risk.
For those who are unable to work for whatever reason, the right level of life insurance, as well as total & permanent disability (TPD), income protection (IP), and trauma cover, can help give them and their family protection and financial security.
Understandably, many people are put off by the idea of needing so many different kinds of insurance, and may feel a bit uncomfortable thinking about what might happen if something goes wrong.
It’s therefore important to understand when and why life or income protection insurance should be considered.
The most common triggers for taking out this kind of insurance are:
- getting married
- starting or increasing a mortgage
- having kids
- sole income families
- big changes to finances, like a higher paying job or an inheritance.
For those who don’t have life insurance at the moment, key questions to ask include:
- What impact would it have on my family’s lifestyle and future if I could no longer earn an income?
- Could I afford to pay large medical and rehabilitation costs if I am in an accident?
- Could I keep paying off my mortgage if I stop earning an income for several months?
- What would happen if I couldn’t pay school fees for the foreseeable future?
If you can’t easily and comfortably find an answer to these questions, then it’s time to think about life insurance.