Life Insurance is definitely more valuable and relevant at certain stages of our life than others, but for anyone who has a partner, children or significant financial obligations, life insurance takes on a whole new level of importance.
While it’s typically grouped as “life insurance” there are actually 4 main types of life insurance to consider:
- Life insurance
- Critical illness insurance or trauma insurance
- Income-protection insurance
- Total and permanent disablement insurance
Each of these types of life insurance protects you in different ways, and some are designed more to protect your loved ones, should something happen that means you’re no longer around to support them yourself. It’s not the easiest thing to think about, but putting in place a life insurance plan provides huge peace of mind – for you and your family.
Once you have life insurance policies, however, it’s not a ‘set and forget’ outcome. Outlined below are 10 scenarios that may impact your financial situation and influence you to consider reviewing (or obtaining) your life insurance cover. It’s always good to get on the front foot with insurance, so have a read through and consider if any of these scenarios may trigger a need to review your life insurance.
1. You have taken on equity or ownership of a business
If you have business partners, then you need a written agreement in place covering succession planning for the business – particularly in the event that one of the partners dies unexpectedly. Insurance may be used as the funding mechanism for part of the purchase and transfer of shares/units. When you consider your life insurance needs, ask yourself: if something unexpected was to occur, can you afford to pay out your business partner’s estate for their share of the business? Or would you prefer to inherit your business partner’s spouse as your new business partner? Would the bank call in all debt with the loss of a key partner, or are there assets you can use as security?
2. You want to insure key-staff for revenue loss
By definition, key employees are crucial to your business and are no doubt pivotal to your ongoing operations and success. How would your business be affected without these people around? You can insure key people for the loss of revenue that occurs without them, the costs of recruiting a replacement for that person, and debt protection.
3. You’re a self-managed super fund trustee
As a trustee of a self-managed superannuation fund, you’re required by the government to consider the insurance needs of the members of the fund on an annual basis. Why wouldn’t you have this reviewed at no cost by a professional risk advisor to ensure this obligation is met!
4. You’ve just purchased a house
With a new house usually comes a new mortgage. This is a huge financial obligation and most people will dedicate a large portion of their income to repaying this debt. Can your family manage mortgage repayments without you? Which would you prefer your family to be left with:a home or a home loan?
5. You’d like to save on insurance premiums
Premium rates change all the time and most companies review their rates on a regular basis – you should too! A life insurance review can ensure you’re not stuck with a provider that is consistently increasing rates above the market benchmarks. It’s also important to stay informed of available structuring options. For example, if you pay premiums via rollover from superannuation, you only pay 85% of the original premium! Likewise, product features, benefits and definitions are constantly changing, so you should be reviewing your cover regularly too. Old products can be closed off, and you may find yourself “stuck” with a legacy policy that doesn’t pay out on current market-leading definitions or claimable events.
6. You've just had a baby
Having children is a primary trigger to take out life insurance; this is when you realise that others ultimately depend on you and your ability to earn an income. Frankly, if you were to die, the financial burden on your partner will dramatically increase. Life insurance can help provide for your partner and your children when you’re gone.
7. You’re married and worried about your family’s future
Sharing your life with someone should mean thinking about their future too, and what might happen if you incur unexpected medical expenses or you need time off work to assist recovery ... or worse, what happens if you’re no longer around? Trauma insurance can provide a lump sum to help with surgery and treatment, while life insurance helps your spouse to manage financial burdens such as school fees and outstanding debt. It allows you to focus on getting better, rather than dealing with financial stress.
8. There’s a history of serious illness in your family
Despite what many people think, you may still be able to take out life insurance if you have a family history of illness. Some hereditary diseases have a major impact on longevity, and insurance companies often load the premium or exclude conditions from policies. While this may seem unfair, it’s also a primary benefit of taking out insurance cover sooner rather than later.
9. Your salary arrangements have changed
A change in salary (or shareholding) arrangements (lucky you!) can drive revised personal remuneration arrangements for business owners. Changing superannuation funds can have the same impact. It’s important to review your income protection cover to make sure you’re covered for the correct definitions and the sum insured is linked to your current financial situation.
10. You've realised a life insurance review is free!
Here at BlueRock, our Private Wealth advisors offer market leading advice on your constantly evolving circumstances and life goals, with professional support offered at every step of the way.
Whether you need clarification on your life insurance policy or want to discuss what policy is right for you, our advisors learn about your unique goals and with access to a wide range of policies and providers, are able to review your insurance levels and make tailored recommendations on how to help you achieve your best possible outcome. And best of all, a review of your life insurance policies is free!
We’d love to chat to you about how we can best help you make the most out of your Life Insurance policy. To review your current Life Insurance policy with one of our Private Wealth specialists, or to find out more, book a free consultation with a BlueRock Private Wealth Advisor.