Three ways to help ensure your life insurance
is protecting you and your family
Life insurance can provide crucial peace of mind if it provides the cover you need.
Most Australians don’t have adequate life insurance coverage, which may leave their loved ones exposed to unnecessary risks. However, even those who are covered can still be at risk simply because they have the wrong type of cover. Life insurance policies can be long and complex documents. In addition, life circumstances can quickly change, turning covers that were once adequate into ones that are insufficient. A good adviser can help you navigate through those complexities and help reassess whether your policy is still protecting you and your loved ones, but a few simple checks can go a long way. Ensure your policy covers you for more than death Life insurance typically refers to lump sum death benefits that are paid out to your beneficiaries after you die. However, there are other forms of insurance that people should also consider when they discuss life cover (and some are often bundled together with typical policies). These include covers such as total and permanent disability ( TPD ), trauma insurance and income protection. TPD insurance pays a lump sum if you become totally and permanently disabled because of illness or injury, while trauma insurance provides cover against a critical illness or serious injury, such as cancer or a stroke.
(Keep in mind that while super funds often bundle death and TPD cover, they are unable to offer trauma insurance.) Income protection policies – which provide cover to those unable to work due to illness – have come under pressure in the life insurance industry in recent years as claims have skyrocketed. This has led to a pricing and coverage overhaul of income protection policies, such as capping the proportion of income that can be replaced (and ensuring policies don’t inadvertently pay more than the insured’s income before becoming disabled). This makes it even more important to receive good advice from a financial planner to ensure any policy provides the right cover for the best value.
Review how much life insurance cover you have
Many people take out a life insurance policy and never think of it again. However, it’s important to regularly reassess the expenses you want your life cover to pay for if the worst should happen. Adding another child to a family or taking on more debt to buy a house or renovate a home are common triggers to reassess coverage. Some parts of Australia are undergoing a major housing and renovation boom, which is quickly driving up debt levels, while rising inflation is pushing up costs.
4 • Viewpoint Edition 2 2022
Powered by FlippingBook