When should you consider life insurance?
Life has a tendency to throw curveballs at us when we least expect them – and having life insurance can help soften the blow of any unexpected events. Life insurance can help protect you and your loved ones financially if something unexpected happens.
Here are a few reasons you might consider life insurance.
Why you may consider life insurance while you are younger
When you are living your best life in your youth, the last thing on your mind is what type of insurance you need. Maybe you’ve got car insurance for your new set of wheels or you’ve got pet insurance for your furry friend – but you’re probably not thinking about spending your hard-earned dollars on a life insurance policy.
When we’re young, we tend to think we are invincible. It’s easy to fall into this mindset and not really pay attention to how we could be preparing for our future.
But did you know that taking out life insurance when you are younger has many benefits? Because as you age and experience health issues, the likelihood increases that your insurer may apply a loading or special exclusion to your policy, or you may even find that some insurers will decline to offer you cover.
Key milestones that could present for considering life insurance
As life changes, so do our needs. Consider your financial situation and even the benefits of life insurance after reaching any big milestone.
Some of the most common milestones that could warrant a consideration of life insurance include:
- Getting married or divorced.
- Becoming a parent and growing your family.
- Making a large purchase such as buying your first home.
- Changing jobs or careers or even retiring.
It’s a good habit to get into, taking stock of the things you’ve achieved and assessing your goals in line with key life milestones, which could help ensure your loved ones are financially protected should the unexpected ever happen.
Other considerations to factor into your decisions
Whether you are thinking about getting life insurance for the first time, or you think you might need to change your level of cover, there are some important things you should consider. These include:
- Size of your family: More dependants means you may need to factor in extra expenses that a large family may face if you passed away.
- Your current income: Many families take out life insurance to negate the risk of losing the main income provider. Consider how this could affect your family in maintaining their current lifestyle, such as schooling costs, childcare, paying the mortgage and ongoing living expenses.
- Debts: Are you debt-free or do you have loans and other debts that will need to be taken care of should the worst ever occur?
- What your family will receive: such as from super, savings, the sale of any investments, your paid leave balance, and support from your extended family
It’s also worth checking whether you already have any other life insurance cover such as through your super.
Moneysmart suggests, before you buy life insurance, check the product disclosure statement (PDS) for:
- what's covered and what's excluded under the policy
- information on premiums and how they change over time
- waiting periods before you can claim
- how to make a claim
30 Jul 2021