Why is Life Insurance important to have?
On the surface, the topic of life insurance is not exactly a sexy topic to discuss. It is often considered as being unrequired or unnecessary, particularly when you consider the costs that is associated with paying the premiums over the number of years, without reaping any benefits (unless of course, you unexpectedly fall terminally ill, become incapacitated or even worse, die). You’re never really sure if it is worth it.
Despite Australia being a developed country, as many as 95% families with children are underinsured, with around 40% of the population with no life insurance cover in place at all (Lifewise/Natwise, 2010; Comminsure, 2012). Most people are quick to insure their car or home before taking out life or income cover for themselves with 83% of Australians having car insurance in place. (AAMI, 2008).
Many common excuses that is offered include:
“Its expensive/I will never need it”
“It’s pointless unless you have dependents”
“It’s wont payout when it comes time to claim”
While it is important to note that in Australia, our compulsory superannuation contributions have life insurance as part of their coverage, helping to bridge the underinsured gap, people need to be aware that there is only a default level of coverage.
A 2015 report from Rice Warner showed that:
- Typical default cover for young families is approximately 30% of what they actually require
- Typical default cover for those with no dependents is 60% of what they actually require
Why you should consider life insurance?
When it comes to buying life insurance, many people consider it as a waste of money for something that is unlikely to happen. This thought all changes when something indeed does happen.
Top 5-7 reasons to get life insurance cover
- Replace lost income: in the event that you become seriously ill, or impaired due to injury, certain life insurance policies can cover a percentage of your salary enabling you to maintain the ability to pay for your expenses or other costs
- Cover burial costs: Funeral insurance enables a lump sum payout to help ease the burden upon your family and/or friends of covering the costs of your funeral
- Pay off debt: Life insurance enables those you leave behind to take care of any financial obligations you had prior to your death
- Affordable coverage: The cost of life insurance coverage is pretty affordable for most people. As a general guide, according to https://www.finder.com.au/why-life-insurance-is-important the cost of cover for a 30 year-old male for a life insurance policy of up to $500,000 is under $28.56 per month
- Peace of mind: Having life insurance cover allows you a peace of mind knowing that your loved ones are financially covered in the event of a terrible event occurring (such as terminal illness, or even death)
Life insurance is one of those things that everyone should have, but very few do. It is easy to delay the prospect of purchasing life insurance when you’re young, healthy and single but the longer you wait, the greater the chances of something unexpected happening before you are able to take out cover.
It is important to ask yourself, whether you would want to continue to leave everything to chance, or would you take out life insurance now in order to ensure the financial stability of your loved ones?
Find out more about how to select the most suitable life insurance for you. Consult an expert life insurance comparison service today