When it comes to purchasing personal life or disability insurance, most Australian families usually aim to insure only the major income producer in the household, while the stay-at-home spouse or partner is usually passed over for insurance coverage since it may seem like an unnecessary expense.
True, your family may very well face some serious financial problems if you were suddenly unable to earn an income due to serious injury, illness or death if it is your pay check that keeps the family’s bills paid, food on the table, and the children’s education costs funded. However, when it comes to the partner or spouse who takes care of the children and home, and performs additional duties that benefit you and the family, have you thought about what your family would do if suddenly he or she were unable to perform their daily duties due to injury, illness, or death?
Many families make the mistake of not insuring a non-working spouse or partner because they haven’t taken the time to consider the monetary value of the child care and domestic responsibilities they perform.
If your family were to lose the stay-at-home parent, have you considered what it might cost to bring childcare into the home, or to pay a childcare facility to look after your youngsters from 8 a.m. to 5 or 6 p.m. daily? What if one of the children became ill and needed to be home with an adult to care for them?
Additionally, have you considered the cost of hiring domestic help to come in and keep up with your household chores, meals, shopping, etc.? Have you considered the reality of trying to take all of this on yourself without help? In addition to working full time, you may be underestimating the toll it could take on you and your family at a time when you are grieving the loss of a partner’s health or life.
By comparing insurance policies to find those that provide coverage suitable for both partners in your family, you can secure the peace of mind that your family will be able to continue to operate without financial strain if the worst should happen to either you or your partner.
Life insurance can take care of financial necessities by paying out a lump sum if you or your spouse or partner become the victim of a traumatic event or critical illness. Be sure you understand exactly what is and is not covered in your life insurance policy. If necessary, talk to a professional advisor regarding the best life insurance plan for yourself and your partner, and compare life insurance policies to make sure you are paying the lowest premium for all the coverage you need.
Term life insurance is often chosen to protect a specific asset, such as your home mortgage, for a fixed time period. You may, for instance, choose to purchase a 25-year term life insurance policy to cover a 25-year mortgage loan balance. If you or your spouse or partner were to pass away before the mortgage is fully amortized, your term life insurance policy can cover any remaining mortgage payments due, and after 25 years when your mortgage is paid in full your term life policy expires. A term life insurance policy may be best purchased when you’re young, since your insurance premiums can rise significantly as you get older.
Universal life insurance, on the other hand, is a policy with no expiration date, and which usually pays to your beneficiary upon your death. When both spouses carry a universal life insurance policy, if one passes away the surviving spouse has a financial cushion to ease the transition whether the deceased spouse was working outside the home or taking care of the home and children full time.
Total and Permanent Disability Insurance (TPD)
Sometimes offered as an add-on to life insurance policies, total and permanent disability insurance (TPD) is intended to protect your family by paying a lump sum if you or your partner becomes totally and permanently disabled due to an injury or illness.
Even if your partner is not a breadwinner, most likely he or she performs a vital role in the maintenance of your household and caretaking of your children. While this type of insurance will replace your salary if you suddenly become unable to work and earn a living, if your partner is suddenly incapacitated it can provide the financial means necessary to hire child care and domestic help to perform the duties your disabled partner used to do.
Since the conditions of payment depend on the insurer’s definition of total and permanent disability, it is important to understand the fine print contained in the policy before you purchase. Again, seek the advice of a professional advisor to be sure you understand thoroughly the terms of an insurance policy before you sign, and compare insurance policies for the best pricing and offerings available.
Trauma or “critical illness” insurance is different from TPD coverage because it is designed to protect you and your family in the event that you are the victim of a traumatic event such as cancer, heart attack, stroke, or coronary bypass. Trauma insurance pays a lump sum upon diagnosis of a specified medical condition, money which can be used to help pay for treatments not covered by Medicare or your existing private health care plan, or for modifications of your home if necessary to accommodate medical equipment and improve access, or even a holiday to help promote recovery.
By including your spouse or partner in your trauma insurance plan, you both can rest assured that you are covered in the event that either of you becomes incapacitated. When a family member experiences a debilitating health crisis, it can be a tremendous emotional and financial strain on the whole family. Trauma insurance can help alleviate the financial strain, especially when recovery involves a lengthy and expensive recuperation period that may require the healthy partner to take time off from work to help care for the ill partner.
When choosing a trauma insurance policy for yourself and your spouse or partner, make sure to understand the definitions of the medical conditions covered by this type of insurance. Each policy will have its own wording, and you should be aware of each individual insurer’s specifications regarding the nature of symptoms, severity of the condition, and the extent of the disability.
Make sure to speak to a financial advisor if you have any questions or doubts at all about an insurance policy you intend to purchase, and even consider discussing the definitions of medical conditions with your physician.
Compare personal insurance policies to educate yourself on what is available and to get the best prices possible on all types of insurance. Visit MultiCover.com.au to view providers and policies and begin comparing today.