Would you sleep easier knowing your family had enough money to live on if you weren’t around?
There’s a reason they call it life insurance
Why is life insurance so crucial to a family’s financial plan? Because a family’s ability to achieve life’s most important goals - a roof over your head; food on the table; a caring family environment; an education for the children – depends on a unique combination of time and money provided by both partners.
Mess with that equation, that combination, and you put those crucial things at risk – the home you want, the education you aspire for your children. That’s why life insurance is so important – it’s not about protecting a house. It’s about protecting all that you value in life.
So why do we go without cover?
“Life insurance is something I’ll think about when I get older.”
“Talking about disasters can make them happen.”
“I’ve got a job and money in the bank. Why should I think about risk? There doesn’t seem to be any!”
And yet these common sentiments fly in the face of some sobering facts.
• Around 4,400 parents with dependent children die each year. (1)
• The average Australian family owes more than $300,000 on their home. (2)
• For every home lost through fire, 3 homes will be lost following a death in the family. (3)
“My superannuation will take care of that...”
Another factor that stops people taking out life insurance is the belief that superannuation, and the insurance that is sometimes included will be enough to rely on.
But superannuation is not there to cover you in case of a tragedy. It’s there to see you live comfortably in your retirement. And it relies on building up capital over a long period - so it may not be the best backstop if your family needs to call on it because something happens to you before you’ve accumulated an appropriate sum.
That makes the life insurance that often comes with your superannuation more important. But is that the answer?
The life insurance that is packaged with your superannuation is often a policy shared with your fellow workers. Buying life insurance “in bulk” via your super fund can be very cost effective, but that’s because the insurance is often a generic cover. So the same policy might be given to a 25 year old graduate who owns a surfboard and a 45 year old manager with a mortgage and two kids.
That’s why consulting a financial adviser about life insurance makes so much sense. It’s the one way to ensure the cover you have is the cover you actually need.