Life Insurance and its importance for parents
Australians are underinsured when it comes to life insurance, with recent research revealing 38 per cent of Aussie families failing to take out any life insurance, and one in four doubting they have enough. It also shows 35% of Aussies surveyed said their families would be burdened if they passed away. As a parent, protecting your family is probably top of mind, so why wouldn’t you take out life insurance if you could? Securing your kids’ future and protecting them from financial hardship are among the key reasons for you to have life insurance as a parent.
Secure the future of your family
If you have children, it’s crucial to consider life insurance. This is also true if you have other dependents. Have you stopped to think about what would happen to them if they were no longer able to rely on you and your earnings? From basics like housing and groceries to sufficient funds for school and university – plans you might take for granted can be severely disrupted by life’s unexpected events.
If you have life insurance, your beneficiaries can access a lump sum of money in the event you pass away unexpectedly. This money can help compensate for the loss of income and can be used to ensure your plans for their future can be fulfilled. It can ensure your dependants still enjoy similar living standards if you pass away.
Protect dependents from hardship
It’s uncomfortable to think about life’s uncertainties, but as a parent you’ll want to make sure you’ve done everything you can to protect your children from financial hardship.
Life insurance can help reduce financial risk by ensuring your beneficiaries receive a payout if anything happens to you. No amount of money can compensate for the loss of a parent, but you can help protect your children from financial hardship in an already challenging time.
Protect your partner from the risk of financial hardship
Financial hardship can also impact your kids through their surviving parent. If you have a partner, would he or she be able to take care of the kids without your help? Life insurance is a way to help prevent your partner’s financial hardship affecting your kids’ welfare and future.
According to the Real Family Protection Survey, only one in three Australian parents are confident they have sufficient life insurance cover, while one in five have cover, but are not sure it’s sufficient.
Plan for repaying debts and expenses
If you have assets like property or shares, you might believe it’s enough for your loved ones. However, if you have outstanding debt – whether it’s mortgages, credit cards, or car loans – these debts can have a profound impact on your family, who may have to sell off assets to pay them. We’d prefer not to think about it, but additional costs such as funeral and burial expenses can add up to $15,000.
So, while you might think the family home and a share portfolio will be enough for your dependants, the reality is debt and costs can quickly accumulate if you don’t have regular income or a solution such as life insurance.
Beyond protecting your kids from hardship and ensuring they can achieve your plans for them, life insurance can be an essential part of your overall financial plan for your family. It can be used as a strategic financial tool to reduce risk in your wealth and financial management plan.
Peace of mind
As a parent, the idea of your kids experiencing financial hardship, not to mention the loss of a parent, is a worrying idea. A life insurance policy can make all the difference helping to cover funeral expenses, outstanding debt, or the mortgage.
Having the right level of cover is crucial, and research has found the median level of cover in Australia meets only 61 per cent of basic needs. No amount of financial compensation can replace a parent, while you can’t control life’s uncertainties, you can reduce risk and give yourself the gift of peace of mind.
13 Sep 2018