Do you need life insurance?

While life insurance is probably the best known of the insurance products we sell, we find our clients still have questions about how to get the right insurance for their needs. What you need changes throughout your life, and can be different depending on your values, so it is important to have a discussion with an adviser. 

Life insurance could make a big difference to the ones you leave behind…

These are the questions we get asked the most, but if you have your own questions, email me here.

Do I need life insurance?

Unlike the other types of insurance we sell, life insurance isn’t for you, and you will personally never use it. 

Life insurance is always for someone else, so consider looking at your circumstances and those of the people you care about. If there would be a financial shortfall or hardship created by your untimely departure, then yes, you need to consider getting life insurance. On the other hand, if you have a freehold home and no dependents, then your need for cover may be minimal, if at all. 

How much life insurance do I need?

You need to think about what those left behind will need. We ask clients to think about the value of their own income over the next 20 years. That could be the loss to your family if you are not around. 

This is a complex question, with so many variables, and answering it is one of the times where the value of using an adviser shows. Having someone who will sit down and get to know you (and get a grasp on your life stage, your budget and your values) makes a world of difference in deciding how much life insurance you should have. 

Key factors to consider include covering debt, replacing ongoing income, covering a mortgage and what kind of lifestyle you want your loved ones to lead. If you have dependants, you will also need to think about the people that will be providing for your children, and how you will structure a pay-out should both you and your partner be gone. 

Who gets my life insurance?

Most policies are set up to be jointly owned, by both the insured party and the intended recipient. This makes everything smoother at claim time. It also means that it is important to update policies should there be a change in your relationship status. 

If the situation arose where both policy owners were deceased, the insurance pay-out would become a part of the estate, or go into a trust if one was set up. Your will outlines who the beneficiaries of your estate will be. 

Is there any way I can get an early pay out on my life insurance?

There is a Terminal Illness Advance in most life insurance policies, which means if you have a terminal illness and are likely to pass away in 12 months you may be eligible to receive your full insurance.  you can receive your full insurance pay-out ahead of time.

How do you claim on life insurance?

If you get your insurance through an adviser, we are always available. You can call us if something happens and we can help you through the process, every step of the way. 

Upon receiving notification that a policy holder has deceased, most insurance providers will immediately release approximately $10,000 to $15,000. On receipt of a death certificate, the remainder of the pay-out is released, which can take a few days. 

Check your life insurance policy regularly

It is important to remember that life insurance shouldn’t be static, it should match where you are right now. This means that as your family or your assets grow, you may need to increase your sum insured. Then, as your children become independent and the mortgage goes down, so should your sum insured. 

This is one of the big differences between an insurance salesperson and an adviser – a salesperson wants to sell you insurance, while an adviser is in it for the long haul. An adviser will make sure you have an appropriate amount of coverage at each stage of your life.

Read more about when to update your policies here. 

If you want to talk to us about taking out life insurance, or review your insurance policy, get in touch today.