Most people don’t want to think about life insurance. It’s one of those subjects we’d prefer to avoid – like making a Will. It means having to face one’s mortality squarely and dispassionately. Some even believe it’s tempting fate. And unlike car or house insurance, organising life insurance bears a strong emotional dimension that is difficult to confront.
But life insurance is one of life’s fundamentals. It is essential to prepare for the unthinkable. As difficult as it is to address, we must consider what our financial situation would be if the breadwinner of the family did not come home from work or became so seriously injured or ill as to be unable to earn a living.
How would the mortgage be paid? Would there be sufficient savings to clothe and feed the children? Their education, through school and university is a huge cost that must be catered for. Would the hitherto non- or second earner be in a position to return to the workforce or increase earnings to cover the gap? Funeral and estate costs must also be paid. And all of this at a time of great turmoil and grief.
Aside from the emotional hindrances we face, the practicalities are a further disincentive to many. It feels like an intricate maze. Trusting your judgment as to which way to turn can be unnerving. Life insurance is a difficult financial product to understand.
There are fundamental differences between life and other insurance products. For example, when purchasing house or car insurance, the term is set in annual increments. But what does ‘term’ refer to for life insurance cover? How do you calculate an appropriate level of cover? At what stage should premiums be decreased? Is medical cover included and are there any tax incentives?
Small and medium sized businesses contributed to nearly 50% of Australia’s Gross Domestic Product and employed around 42% of Australia’s total workforce in 2007. This is significant. But a recent study by Swiss Re found that Australians were chronically underinsured. Running your own company carries substantial risks. However, these can be leveraged through life insurance cover. It will not only safeguard your family’s future but the knowledge that you are covered will alleviate much of the stress faced in the day-to-day running of your business.
Obtaining sound financial advice is a critical factor towards ensuring that the product you purchase matches your needs.
A good financial advisor understands that the life insurance product you buy is very personal. Tailoring that cover to suit your circumstances and your budget is a critical part of their undertaking to you. Your advisor’s specific knowledge of this industry will help you avoid mistakes such as being underinsured or having overlapping cover through your mortgage, for example. In addition, you will receive advice on tax effectiveness, combining cover with a family member and on the benefits and extras available to you.
So, when should you consider taking out a life insurance policy? If you’ve read this article to the end, you should probably do it now.
If you are looking for a better way to get ahead financially and would like some support to make it happen then I would like to personally invite you to visit http://www.theinsuranceadvisor.com.au and receive a complimentary, obligation free consultation.
Simply visit http://www.theinsuranceadvisor.com.au and “Request A Quote” to get one of of our friendly staff to call you.
I’m Bill Savellis at TheInsuranceAdivsor.Com AU and here’s to bridging the gap to your financial freedom.