In the day-to-day business of life, it’s easy to avoid thinking about what would happen if you were no longer around. Let’s face it, there’s enough to be getting on with. And if you have considered getting life insurance, you might get stuck on thinking about all the money you’re going to spend on it – without being around to see a return on your investment. You might ask yourself: why bother?
But, just for a moment, imagine how it would be for your loved ones if you passed away unexpectedly. How would they cope financially? What future would they face? Would they be able to maintain their lifestyle if you were no longer around? Without your income, your family might have to leave their home or your kids forced to leave university – or they may simply struggle with living expenses. No-one can predict what will happen, but you can take action to protect your family and lower their risk of financial suffering by taking out life insurance.
What is life insurance?
Life insurance is a financial backup plan that looks after your family’s needs when you’re no longer around to do that. This cover provides a lump payment so those closest to you can cover their cost of living should you die, and in some cases earlier if you are diagnosed with a terminal illness.This payout can be used for any purpose, from paying off debt to replacing your salary so your family can continue to live comfortably.
Did you know that only 4 out of every 100 Australians have adequate life insurance? This means that 60% of families would be in financial distress just one year after the death of the breadwinner.
How does it work?
There are some things they could go without, but you wouldn’t want your family to be forced to sell valuables and personal items just to survive. Figuring out the right amount that will keep your family safe is a complex task that needs careful consideration. For example, you can hold life insurance in your name, or in your superannuation fund. Both options have pros and cons. Holding life insurance in your name means a more direct and tax-free payout – but you won’t be able to get a tax deduction on your annual premiums. The superannuation fund option gives you cover without eating into your family budget, and you also effectively benefit from a tax deduction on your annual premiums. But it’s far from straightforward. If you died, the trustee of your superannuation fund could delay the payment to your beneficiaries, which may also be taxable up to 31.5 % – and your family could even face disputes over who receives the payment.
Fortunately, help is at hand so you can untangle the red tape, get the balance right and avoid financially burdening your loved ones. Get the expert advice you need for a life insurance cover plan that won’t break the bank.