Have you recently started a family or taken on significant debt? Here’s how life insurance can protect you and your loved ones.
If you have recently purchased a property or started a family, it’s normal to consider the future and how you and your family’s financial stability would be impacted should you be unable to work for an extended period or if you were to suddenly pass away. This is the reason why many Australians take out life insurance policies to help protect their families and loved ones, providing peace of mind should the worst happen.
Committing to a partner, taking on debt, or having children are all milestone moments in our lives and these are also important junctures to take stock of your changed personal circumstances and consider any potential risks that you might need to insure yourself and your family against. Personal insurances can be seen as a bridge that can help us and our loved ones achieve our long term financial objectives, even if the family’s earning capacity is impacted by serious illness or death.
Main types of personal insurance
- Death Cover – the insurer provides a lump-sum death benefit to the policyholder’s beneficiaries upon their passing. This financial support can help cover funeral expenses, outstanding debts, provide for school fees or other planned expenditures, and replace lost income, ensuring that loved ones aren’t forced into financial difficulties.
- Total and Permanent Disability (TPD) Insurance – the insurer provides a lump-sum benefit in the event of the insured becoming totally and permanently disabled and being unable to work. It offers a lump sum payment that can be used to cover medical bills, rehabilitation costs, mortgage payments and living expenses. This coverage is especially vital for young families as it protects their financial stability when the primary breadwinner or carer faces a sudden disability.
- Trauma Cover – Trauma cover is paid when the insured suffers a ‘traumatic’ event, irrespective of outcome. Common examples include heart conditions, cancer and strokes. This cover is used to help cover short-term costs and medical expenses to provide a lump sum of cash to meet immediate needs.
- Income Protection – the insurer provides a monthly payment to replace up to 70% of the insured’s salary lost in the event they are unable to work for an extended period because of accident or illness.
Benefits of taking out life insurance whilst young
Affordability & ease of insurability
Insurance cover premiums are generally more affordable when purchased at a younger age; the younger you are and the better your health is, the lower the premiums tend to be and the easier it is for you to be insured without any exclusions or loadings.
Peace of mind
Knowing that your family is financially protected in case an unforeseen event transpires provides peace of mind to you and your loved ones, allowing you to focus on building your lives together.
Flexibility
Insurance policies can be tailored for your specific individual and family needs in order to provide the best possible cover to suit your individual needs.
Tax deductibility
Death cover and TPD cover are generally owned within superannuation funds, and these are tax deductible within the fund, saving personal cash flow and maximising tax deductibility to save costs. Income Protection is tax deductible in one’s personal name which can greatly reduce the cost of cover if you are on a high marginal tax rate (up to 47% saving including the Medicare levy).
Where BDJ can help
BDJ has a long history of providing personal insurances to our clients and their families. We facilitate this process as your broker and will help discern what cover types and amounts you and your family needs and then we will source the best offer from our approved panel of insurers.
Published 29 September, 2023