Part of a good financial plan is insurance, particularly life insurance. Life insurance is a lump sum payment to your nominated beneficiaries on your death. When the worst happens, your family can support each other instead of worrying about how they will pay the mortgage, other debts and ongoing living expenses.
Not all insurance policies are the same and below we have outlined what you need to consider before taking out life insurance. Of course, our insurance specialist here at Camori Investments can help.
Evaluate your situation, and talk to your insurance specialist at Camori Investments. Understanding exactly what insurance you need before looking through policies make the whole process quicker, easier and more cost effective.
What percentage of the current family income do you provide? How much debt is attached to your estate? Knowing your everyday and future expenses allows you to determine how much cover you need. Your sum insured should be enough to cover the financial effects of your death. Consider having enough money to pay off major debts such as the family home and invest for future expenses such as children’s education.
Before taking out a life insurance policy ensure that you can afford the regular premiums now as they may increase in the future. In some cases, your life insurance premium can be taken directly from your superannuation account, allowing you more room within the family budget.
As you get older, your insurance premiums increase, as you are more likely to make a claim. Depending on your policy you can generally select between two different types of premiums – stepped and level.
Stepped premiums generally are lower in the early years as they increase each year as you get older. If you are considering this option, look at the what the premiums might be in 5 or 10 years to ensure they still fit into your budget.
Level premiums do not change with your age, however they are generally higher in the beginning. They may also increase overtime due to inflation or changes with your insurance company.
For this reason, getting the right type of insurance advice for your situation is vital.
Your insurance cover should be reviewed regularly as your life changes. Find out if your current policy will keep up with inflation or will the sum insured be enough when you expand the family home or have another child. A Camori Investments insurance specialist can help you ensure your policy is adequate for your needs.