It’s always interesting asking local business operators how they ended up…
Welcome to the First Edition of my Insurance news.
Today, let’s talk about a really boring subject for many, but also an extremely important subject.
“Life Insurance “
Life Insurance or Life Assurance is an Insurance product that pays a lump sum in the event that the person insured passes away prematurely or has been diagnosed with a terminal illness and is not expected to live for 12 months.
This lump sum is transferred to the owner of the Insurance policy or to the insured person’s estate, and this lump sum can be used for a wide range of purposes.
These include but are not limited to :-
- Paying off mortgage debt
- Paying off personal debt
- Providing funds for children’s education
- Providing funds for day to day living expenses
- Funeral costs and final expenses with lawyers & accountants
- Business buy/sell agreements
What does Life Insurance or Life Assurance cost ?
There are several factors that decide the premium that you need to pay on a weekly, fortnightly, monthly, six-monthly or annual basis.
- How old are you
- What gender are you
- Do you smoke
- What is your occupation
- How healthy are you – do you have any pre-existing conditions
- Do you enjoy any crazy or dangerous sports
How much Life Insurance of Life Assurance should I have ?
This is a common question by many clients and typically most insurance brokers have different formulas and ideas.
What do I think? I like to ask the question back to the clients to get their ideas on if they passed away today what they believe is an amount of life cover their family would need to be financially secure and hopefully lead a normal life in the future after such a major setback in their lives.
The feedback is normally to do the following:-
- Pay off the mortgage(s)
- Pay off credit card debt and all other loans
- Funds to help the children thru school years
- Help with living expenses
- Help with taking some time off work to grieve
- Help with funeral costs
So, Jack and Jill might have a mortgage of $350,000, they have 2 children aged 13 & 15.
They pay off their credit cards every month and have no personal debt. They have reasonable jobs as an electrician and a part-time early childhood teacher earning $60,000 and $33,000 per annum respectively.
How much life cover should they have?
$350,000 to pay off the mortgage should either of them pass away prematurely, plus $10,000 to cover funeral costs, plus an amount to help them bring up their children thru teenage schooling years and even with university costs. Maybe an amount also to take time off work for 6 months.
Jill will also need a larger lump sum if Jack passes away because she is only working part-time.
The end amounts are decided by the client with excellent discussion with an insurance broker.
I would certainly expect Jack to have life cover of around $700,000 and Jill around $500,000.
There are many financial institutions that offer life insurance or life assurance, with different terms and conditions. An Insurance broker will do all the difficult work for you and ensure that the company, product and policy wordings are the best for the client.
There are also many features and benefits that Insurance companies offer with their life insurance or life assurance product. These can be crucial when deciding on the best company.
There are many other Insurance products that clients should also be strongly considering.
I will write about these in future articles.
If you wish to discuss Life Insurance or have any insurance questions please contact us at 03-548-7979 or 0274-477-275 or click on the link below