Are You Underinsured?

Most people spend a lifetime earning what they've got. Our lives and our income earning capacity are the basis of our wealth. Often, others depend upon us and our income.

The financial consequences of an unexpected death, accident or illness can be critical. For this reason, adequate protection in the form of risk insurance which can preserve your wealth and your family's lifestyle is encouraged and should be incorporated in any comprehensive financial plan.

Have you thought about how your family or your partner would cope financially if you died? It's not surprising that most people don't like to think about their own demise or disablement. A loss of income can disrupt essential expenses including mortgage repayments, regular bills and the costs associated with raising a family and running a household.

The facts are that Australians are extensively underinsured with many not even aware of the benefits of insurance.

Term life insurance has no investment component and is simply defined as pure insurance which pays a lump sum benefit on the death of the life insured.

The industry guideline is that most people need an amount of cover which is about 10 times their salary. Our Life Insurance Calculator can provide a more comprehensive life insurance needs analysis.

The premium paid is based on the level of risk taken on by the insurer and is indicated by factors including age, health and participation in hazardous leisure activities.

Term life insurance is most suitable for:

• The main provider of the family's income
• The full time homemaker and parent
• People with dependants
• Anyone with significant debts or assets
• Key people

The most appropriate option for implementing life insurance should be discussed with your advisor who will also calculate for you an amount of cover appropriate to your situation.

Life insurance can be taken up either inside or outside superannuation. Insurance within superannuation has the benefit of premiums being tax deductible.

If you are self-employed or have a spouse who is on a low income, you can save on the cost of life insurance premiums by purchasing risk cover through a superannuation fund rather than as a separate policy.

The insurance premiums are treated as superannuation contributions. Therefore, the same tax deductions and rebates which apply to superannuation also apply to insurance purchased through a superannuation fund. Those who are self-employed can claim a tax deduction on their super contributions, regardless of whether the contribution is used to purchase investments or insurance. This tax saving option is ideal for those who have a young family and are seeking increased security and financial protection as the amount saved through deductions and rebates can be used to increase your level of insurance cover.

If you think you may be underinsured or would like to review your existing insurance cover with us, simply follow this link: Enquiries and mention "Life Insurance".

Source: Personal Wealth

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