Protecting Your Lifestyle with Income & Life Insurance

Our lifestyle is a very important factor in our everyday existence and at times it is an aspect that some of us take for granted until an incident occurs that compromises how we live. This may be a result of an unforeseeable accident that reduces our financial earning capacity or worse still claims the life of a loved one. While it can be painful to consider the unsavoury possibilities it is also smart thinking protecting your future and that of those that you care about most. Life and income protection insurance ensures that you and your family’s quality of life remains the same no matter what the circumstances.

Angela and Paul have just married and bought their first home, as a couple their financial responsibilities have increased considerably and Paul knows that as the main income earner Angela would not be able to meet the mortgage repayments if he was no longer able to work or passed away. Therefore, he is considering both life insurance and income protection insurance, which will give him and his wife peace of mind as well as guaranteeing their continuity of life.

While Angela and Paul’s circumstances is one that warrants income protection and life insurance cover there are many others that are also feasible, these include:

1. A single person wishing to cover their financial obligations.
2. Partners who are not legally married but hold joint assets and liabilities.
3. Partners or married couples with children under the age of 18.
4. Retired couples or individuals.
5. Self-employed contractors or business owners who may be either single or within a relationship.

So how do you work out how much cover you will need?

The easiest way to calculate this is by looking at your circumstances and taking all of your costs into consideration. If you are looking at income protection work out how much you need weekly to pay for your expenses and cost of living. Include car and home repayments, utilities and other bills as well as food and expenses. For example - if you earn $800 a week after tax whilst working it is best to replicate this amount.

In terms of life insurance consider the cost of paying out your mortgage and any other loans that you may have, cover your burial expenses and if you have a family leave them enough to live on for at least 12 to 18 months while they adapt to their new lifestyles.

When looking at life and income protection policies it is important to ask-
1. How premiums are calculated?
2. What exactly are the fees, charges and commissions?
3. Exactly what your policy covers in terms of illness and death?
4. What are the policy terms and conditions are?

Without answers to these questions you may find that your insurance does not cover you for all illnesses and that it has clauses within it that prevent you from collecting on your policy under certain circumstances, as well as hidden costs and charges that are included in your premiums.

Most of the time, life insurance and income protection premiums are calculated according to the risk to the insurer, therefore factors like previous illness, disabilities, family medical history, your age and your occupation play a large role in determining cost, as does whether you smoke and drink alcohol. On many occasions in order to secure a policy you will be asked to undergo a medical examination by a qualified practitioner to ensure your medical soundness.

Life insurance is typically offered via financial planners and life insurance brokers and choosing the right broker or planner is usually by way of referral; ask family, friends and colleagues about their experiences and if they can recommend anyone and remember that you must genuinely like this person because they will need to know your financial background and personal history in order to offer you the best policy.

Disclaimer:

No investment advice provided to you.
This web site is not designed for the purpose of providing personal financial or investment advice. Information provided does not take into account your particular investment objectives, financial situation or investment needs.

You should assess whether the information on this web site is appropriate to your particular investment objectives, financial situation and investment needs. You should do this before making an investment decision on the basis of the information on this web site. You can either make this assessment yourself or seek the assistance of any adviser.