"I am 55 years old and have basic life insurance with my Superannuation. How do I know if this insurance will be enough for my Husband and 2 school-aged children if I were to pass away considering I am the sole breadwinner?"
-Nicole in Fremantle, WA
Top answer provided by:
Thanks for reaching out; I love when people take an interest in their life insurance. People often overlook insurance in favour of the more sexy wealth creation discussions.
Insurance is generally a grudge purchase., which makes getting it right even more important. You also do not get an opportunity to do it after the fact.
We have a structured process to work out what type (life insurance/TPD/income protection/trauma cover) & levels of cover you need - it mainly revolves around;
- Your family situation (number & ages of children/dependents)
- Your debt levels
- Your family’s income requirements
Once the above steps are complete, we overlay what you currently have in place versus what you need, overlay this with;
- Your risk tolerance (how much risk are you willing to take by being underinsured)
- The cost of the cover – impacted by your age, health, height/weight, smoker status & family medical history
- The structures we use to own the cover – is it all paid from your bank account or is your super account used to fund some of the covers
In lieu of getting advice from a specialist (which I am biased towards), here is a simple calculator that may help you start to understand your needs.
Finally, try to remember that claiming on your insurance premiums is a good outcome, but paying your premiums & not having to claim is even better.
Cheers - MH
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