Who wants to live forever? Well plenty of us may do, but we also know that death is inevitable at some point, so preparing for that is part of being an adult. We make wills so our loved ones know how we want our possessions to be shared, but it is equally important to make sure we have a good life insurance plan in place.
Life insurance is one of the best ways to make sure that our death doesn’t leave behind debts like funeral expenses for your family to deal with or mean your family loses their home as mortgage repayments cannot be met.
Types of insurance Perth, Western Australia residents may need
Term life insurance
This is the simplest form of life insurance around, and usually the cheapest. Costs are lower as it only pays out in certain circumstances, generally on the death of the person named on it. Term life insurance policies are fixed for a number of years, and no payments made are refunded should the term end and you are still alive.
Many people choose to buy a set term life insurance policy while their financial responsibilities are at their peak, for example, when a mortgage is being paid on a property and/or dependent children are part of the household. Should they then die, or suffer chronic, long term injuries following an accident, there should be enough cash provided to meet all subsequent living and healthcare costs. Considering the average family home mortgage in Perth is around $343,900 this is a sensible idea.
Some choose to resume a smaller term policy later in life to cover funeral expenses, and perhaps to leave some form of nest egg for the family.
Family cover insurance
A common mistake with life insurance Perth residents may make is to only insure the life of one person in the family, usually whoever brings in the largest income. Unfortunately it is not always the biggest earner who dies or becomes dependent on extra care. Family insurance cover is important too.
Take a typical family unit, where one or both partners are in paid work, and also take care of children. If the unwaged/lower-paid partner should die, or be left unable to carry out their usual tasks, there are still funeral expenses to be paid and daily living expenses to be met.
Exact statistics are difficult to find, but depending on the ages of the children involved, outsourcing the tasks involved could easily run into the hundreds of thousands. (This covers the costs of outsourcing tasks like childcare, cleaning, cooking, and shopping, as well as covering the income a second earner would have brought in.)
Thinking about life term and family insurance may not be the cheeriest of topics, but it is something best organized and left in place to do its job as soon as it becomes necessary. It’s a decision you will never regret.