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Aunt Viv says: We all know Sorry Business is a tough time for our mob. You should think about life insurance to help look after your family if anything happens to you. Have a chat with your super fund who can help you out with getting started.
Life insurance will pay out money to whomever you nominate. The people that you select to receive the money are called beneficiaries. If you pass away but don’t have any beneficiaries, then the super company will decide where your money will go.
When deciding how much life insurance you may need, it’s a good idea to see how much money you or you family would need to pay for:
- Rent or mortgage
- Credit cards, personal loans or car loans
- School fees and other ongoing expenses.
The last thing that you want to do is to leave family with all the bills to pay. So, if you add up all the debts and expenses, you can get this amount paid out so your family can use it to pay everything off.
Total and permanent disability (TPD) insurance
This is insurance that will pay you a lump sum if you acquire a permanent injury or illness and you are unable to work again. It’s designed to help pay for your medical bills and living expenses because you are unable to work.
Each superannuation company is different in what they determine to be permanent disability, so you will need to read up on the information they provide you.
Just like life insurance, when thinking about how much you need, you should add up all the bills and expenses that will still need to be paid. Just because your income stops it doesn’t mean that your bills stop, so you want to make sure that you have enough money to cover costs.
Income protection insurance
Income protection insurance will pay you part of your income while you are unable to work due to a partial or total disability. You can have up to 75% of your wage paid to you by the insurance company even though you are no longer working. Below are two things that are really important when looking at income protection insurance.
How can I afford to pay insurance?
Because your insurance is in your super account, the cost of the insurance will also come from your super account. This means that you don’t have to pay anything extra out of your regular pay.
Having insurance in your super can be cost effective because it’s not another bill to pay each month, but it can sometimes be cheaper to have your insurance outside of your superannuation.