Budgeting for Life Insurance

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Many Australians avoid purchasing life insurance for many reasons, but one reason that seems almost universal in preventing people from committing to life cover is price. Of course, your budget plays a significant role in the type of life insurance you can purchase and maintain. You want to be able to pay your premiums without them becoming a major squeeze on your living expenses.

Your budget needs to be a major consideration when it comes to purchasing any type of insurance. However, you might be surprised to learn that life cover may not be as expensive as you think. In fact, life insurance can be inexpensive compared to most other types of insurance, and when you find a plan that works within your budget, the peace of mind that comes with it may be an added bonus.

Keeping your insurance payments within a comfortable price range should be the goal, and it’s an achievable one. The sooner you begin comparing life insurance plans, the better prepared you will be to make an informed decision.

When you stop to consider the financial consequences of not having life insurance in place, it might be easier to put this type of purchase in perspective. You insure your car in case it is involved in an accident and needs repair or replacing. You insure your home and belongings for the same reasons. Now ask yourself what would happen if your ability to work and earn a living were injured or lost entirely? For most people, the ability to work and maintain an income is their most valuable asset; without life cover in place for protection, what would be your Plan B if disaster struck?

Before you begin the process of comparing life cover policies, look at the actual numbers or range of prices available through different funds. At MultiCover.com.au, we provide an online resource for comparing life cover plans and prices. This way, you can get a general sense of what the monthly price of your premium might be based on the type of coverage you are considering, which is a good starting point.

Once you find your pricing comfort zone, it becomes easier to begin the selection process in earnest with your advisor. Take a serious look at your insurance budget, and your lifestyle. Ask yourself some difficult questions about some of life’s “what ifs,” and take notes. This is where your advisor can assist you.

What if you were involved in a serious accident, or were suddenly diagnosed with a life-threatening illness and could no longer work?  What would happen to you or your family if you could no longer earn a living? These are the “what ifs” that life insurance may be able to answer. With the right life cover policy in place, you may be able to protect your lifestyle, your ability to pay bills and take care of your children should something happen to you.

Determining the right amount of life insurance you need is a very personal matter. You will  want to take into consideration the amount you believe would be necessary to take care of financial matters if the unexpected happens. You also need to weigh that with the price of your monthly premium, and where it fits in your budget.

Once you begin comparing life plans and get an idea of what size premium you can comfortably afford, you should be able to decide on a policy that offers adequate protection within your price range.

Be realistic about your immediate life insurance needs and what you can comfortably afford. Some insurance professionals might advise you to compare rates first, before comparing policies, in order to get an accurate understanding of price ranges based on the type of plan you have in mind. Keep in mind that policies vary, so seek assistance in understanding what the terms and conditions are for each policy

To determine the coverage you need, start with figuring your monthly expenses including your mortgage, car payment, credit card debts and other obligations. Next, make a list of the expenses your family would shoulder if you lost your ability to earn a living and provide for them.  Consider your children’s education costs through high school, your mortgage or rent, groceries, auto loan payment, auto insurance, home owner’s insurance – everything that you pay for now with your income. The amount you come up with can help determine the level of life insurance you need.

Discuss the amount of coverage you think you need with an insurance or financial professional who can offer guidance and help you make an informed decision. A professional can help you  balance the amount of coverage you need with what you can afford.  You may be able to take on a hefty amount of coverage at a low rate if you’re young and healthy, and see if it works within your budget. If you lock into a whole life insurance plan at a young age, it may be financially beneficial to you in the long run. However, that is a decision best made with the help of a professional advisor.

Once you have your life cover in place, it is important to continue to compare insurance plans once or twice a year, to be sure your coverage continues to meet your needs and budget. If the coverage you believe you need is not within your budget, look at other options for now, such as a term life policy which can sometimes cost less than a whole life plan, or you may choose to save for the whole life policy you want.

Be sure to compare life cover plans to find the best policy for your needs and budget. At MultiCover.com.au, you will find it easy to navigate a wide range of insurance providers to compare policies and prices thoroughly.

If you know what your life insurance requirements are, you can compare options quickly and privately online by simply logging on to MultiCover.com, and remember to talk to an insurance professional or financial advisor if you have any questions about purchasing life cover or any insurance product.


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