Should I Get Life Insurance Now?

A robust financial plan needs life insurance as it protects our family if we die or become disabled. Buying insurance early typically also allows you to lock in lower premiums and benefit from a more comprehensive selection of policies.

Should you buy life insurance now?

It depends on your situation. Let’s look at the reasons to get life insurance, your options, and how to get life insurance direct or outside your superannuation.

When Is the Best Time to Get Life Insurance?

In general, your premiums will be lower if you invest in your insurance policies when you are younger. Buying life insurance might not be a big deal if you’re single and don’t have anyone who depends on you. But if you already have a family or are planning to start one soon, you should have life insurance.

When young and healthy

Young people tend to put off purchasing life insurance, but the younger and healthier they are, the more money they are likely to save over the life of the policy. Life insurance rates usually increase in cost as you get older. Term life insurance often costs less at age 20 than it does at 40.

When deciding how much insurance you should apply for, you can seek out online calculators for a DIY approach, or an experienced Wealth Protection Specialist can assess your situation and determine what an appropriate level of cover would be to meet your and your family’s financial needs.

After a Major Life Event

Most people are motivated to get life insurance after a life-changing event, such as getting married or starting a business. Others do so when buying a house or having children; and most significantly, when faced with their mortality.

Life Events That Motivate People to Buy Life Insurance

Getting Married

When recently married, life insurance is usually a good choice because it ensures your loved one won’t have to worry about financial hardship and an uncertain future following your death.

If you die without life insurance cover, your spouse may also be liable for your debts since you assume joint financial responsibilities when you marry.

Starting a Business

Business people or self-employed people should consider having life insurance to provide financial security for their families and business partners if they cannot run their businesses for an extended period.

You can benefit from life insurance such as Life Cover, Total and Permanent Disability (TPD) insurance, and Income Protection insurance. These can cover your fixed costs if you cannot work due to critical illness or disability. Insurance payouts can cover loan repayments in case of death or inability to work.

Self-employed people may also consider additional policies such as Business Expenses which ensures payment of the fixed expenses of the business if you cannot work due to injury or sickness and Key Person insurance which provides financial protection to the business if a key person dies or is unable to work due to injury or illness.

Having Children

It is a smart move to ensure you are adequately protected with sufficient life insurance when starting a family. It’s crucial regardless of family structure. Stay-at-home parents and breadwinners alike need to be covered.

Without a stay-at-home parent, the other parent may have to pay for child care and domestic assistance such as home maintenance and cleaning.

You might have default life insurance through your superannuation, but is it enough to cover the extra costs of raising a family without you? The default benefits within your superannuation life insurance policies may greatly differ from what you require, should you complete an in-depth analysis of your insurance needs.

Income protection insurance can also be necessary for your financial safety net. It can give you a certain amount of your regular income if you can’t work for a long time because of an illness or injury.

Finally, trauma insurance can support you financially if you suffer a serious medical episode. This lump sum payment can help you pay for additional domestic help or childcare so you can focus on your recovery.

Buying A Home

When you buy a house, it’s often a good time to rethink how much cover you need. You can’t leave yourself, or your family unprotected when you buy a house, get your first home loan, or increase your mortgage.

Who would pay the mortgage if you or your partner got sick, injured, or died? Could your family pay off the house, cover funeral costs and maintain the cost of living expenses if one or neither of you were there?

Recognising Mortality

When a close friend or family member gets sick, hurt, or passes away, it’s a shock and a good time to think about your financial security.

In Australia, the leading causes of death and disability are common chronic diseases like heart disease, dementia, cancer, asthma, and diabetes. This puts a lot of stress on families and carers.

No one wants to think about getting a serious illness, dying, or becoming totally and permanently disabled until something happens to show us that we don’t have complete control over these things.

Cost of Waiting

You may have heard the saying “A stitch in time saves nine” when you were in primary school. Like all timeless truths, it holds true even for buying life insurance. If you wait too long to purchase life insurance, you and your family could be financially disadvantaged.

Higher Premiums

Life insurance premiums can vary significantly between age groups and life insurance providers, and age is frequently a determining factor in the cost of life insurance policy premiums.

All things being equal, a life insurance company usually charges younger applicants lower premiums, believing that these applicants are healthier and have a lower chance of dying soon.

As you age and approach or reach retirement, premiums will be a lot more expensive than your young adult counterparts as your life expectancy is decreasing. Although for some people, it may still be sensible to invest in new life insurance, depending on their personal circumstances.

Keep in mind that there is a certain age when you would not be eligible for life insurance cover. The oldest entry age for life insurance is generally 75 years old but it may be less for some insurers.

So should you choose stepped or level premiums?

When you are young, the cost of a stepped premium will be low, but it will go up every year and be very expensive when you are older.

On the other hand, a level premium will stay the same as you age. Over some time, the premium is “evened out” or averaged.

Leaving You and Your Dependents Vulnerable and Unprotected

In the event of an untimely death, illness or injury, life insurance policies fill the gap between your savings and your family’s financial needs. This covers ongoing obligations like monthly bills and loans, other living expenses, medical expenses, funeral costs, and significant future obligations like paying for a child’s college education.

Without life insurance, a family falls into financial stress, leading to early exits, debt, or default on loans.

Increased Policy Denial

As we age, we’re more susceptible to risk due to poor health. And certain medical conditions may lead to a life insurance application denial when one’s medical history is checked.

Suppose you have a chronic or terminal illness at the time of your application or a history of serious medical issues. In that case, the insurance company may turn down your application or apply exclusions or loadings to your policies. Cancer, heart disease, stroke, and diabetes are all chronic illnesses that sometimes lead to premature death if not appropriately managed.

How to Buy Life Insurance

Life insurance is an important tool for financial planning, but finding coverage that meets your goals and budget can be difficult. The following simple steps can help you find a policy that fits your needs.

Step 1: Evaluate Your Needs

Take some time to think about your finances before you consider your life insurance.

To decide how much life insurance to get, think about how much money you or your family would need to maintain a lifestyle should you get ill, injured or pass away.

The difference is in how much coverage you should get. Determine how much your dependents would need to pay the mortgage, credit cards, other debts, child care, school fees, medical bills, and ongoing living costs. Then deduct how much they get from your super, savings, the sale of any non-essential assets, and your paid leave balance.

Check your super to see if you already have life insurance. Most super funds come with default life insurance. You can get more coverage through your super fund or personally if you need to.

You can also buy life insurance from a financial adviser or insurance company. You can buy life cover on its own or bundle it with other life insurance products like TPD insurance, trauma insurance, or income protection. If it’s bundled, the amount paid out for other claims in the package could lower your life cover. See the product disclosure statement or ask your insurance company.

Step 2: Compare Life Insurance Options

Once you know how much life insurance you need, shop around and compare life insurance quotes.

It’s hard to compare insurance companies based on how they will cover you, so many people compare prices and choose the cheapest option.

However, it would be best if you compared beyond life insurance costs as a cheaper policy may have more things that it doesn’t cover, it may cost more in the future or have a poor successful claim record.

There are many companies in the insurance industry, and each of them gives their customers something a little different. Each company could offer different perks or benefits to differentiate itself from the competition.

Remember that obtaining life insurance quotes becomes considerably more complicated if your health condition necessitates additional loading to the basic rate.

It may be best to seek advice from an expert Wealth Protection Specialist who has comprehensive knowledge of the life insurance policies on the market, how to structure them, how they differ from each other, and each insurer’s application and claims process.

Step 3: Make an Application

Once you’ve chosen an insurance company, your Wealth Protection Specialist or Insurance Representative will ask you a series of underwriting questions to find out more about your health, family history, employment and lifestyle.

When you apply for or change your insurance, this is when the insurance company will ask you questions to figure out how risky you are.

If an insurance company doesn’t ask about your medical history, it could mean that the policy has more exclusions, higher average premiums, or less coverage.

During the application process, they will also decide if they need anything else from you before accepting your life insurance application.

The information you give the insurance company will help them in deciding if they should cover you, in calculating life insurance premiums, and what the terms and conditions of your policy will be.

You must give honest answers. If you provide false or incomplete answers, your insurance company could end your coverage or refuse a claim you make.

Protect Yourself and Your Loved Ones with NFPG

Life insurance is essential, and if any of the following apply to you, consider buying life insurance:

Someone depends on you for financial support.
Your estate will need more liquid assets to cover taxes and debt.
You wish to cover funeral and burial expenses.
You want to leave a charitable legacy for a cause you support.

Life insurance is an important investment to ensure the financial security of you and your loved ones in the face of unexpected events. By understanding how your personal insurance impacts your future, you can make informed decisions when choosing the best policies and coverage for your needs.

Seeking the advice of an experienced Wealth Protection Adviser who specialises in insurance can make it easier for you to find the most comprehensive and cost-effective options.

Do you need specialist insurance advice from a professional financial adviser? Newcastle Financial Planning Group is here to help you.

Call us or book online to secure your first appointment with us today and get started!

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