Do I Really Need Life Insurance?
You hear about life insurance all the time, but is it something you really need? Well, if you are completely healthy and remain so until you die, if you never have an accident, if your children are all grown and gone and you have saved up enough money to bury you and pay off your remaining debts, then you can probably get away with not having life insurance. Everyone should at least think about getting it.
Most people think they don't need, or can't afford, life insurance. Unfortunately, that line of thought won't help you provide for your family in the event of your death, illness or accident resulting in disability. Given that most traumatic experiences, such as heart attack and stroke, happen at an average age of 42, you may need life insurance sooner than you think.
The great thing about life insurance is that it doesn't just cover incidences that result in death. You can get coverage for accidents or sickness that helps to supplement your income until you're back on your feet. You can also get policies that provide lump sum payouts if you're disabled before retirement age, or if you become ill with a life-threatening disease, such as cancer.
What's Available?
Income Protection or Disability Insurance: This can be very important to protect your earned assets. In the event of sickness or accident, this policy insures you'll receive up to 75% of your income. This can be useful for the self-employed as well as full-time employees looking for wage protection.
Income protection policies offer flexible terms that can be tailored to meet your needs. You can customize the waiting period for benefits so that your insurance payment kicks in after sick and long service leave payments have been exhausted. The length of benefit payment is also negotiable and can be customized to a specific length of time-say two years-or an age, such as retirement.
Trauma Insurance: The average age for trauma experience is 42 years, so this is an important insurance to consider if you're in the prime of your life. Trauma insurance pays out a lump sum when you're struck with a disability or illness spelled out on the policy, such as cancer or heart attack.
This policy may or may not protect against accidents and may be limited to only life-threatening diseases actually listed on the policy, so check the details carefully. You'd probably want to use this as an add-on policy to your income protection, because this insurance doesn't protect against income loss.
Life Insurance: This is the classic policy that everyone thinks of when they hear the term 'life insurance'. This policy pays your family a lump sum of money in the event of your death. When choosing a life insurance policy, you'll want enough coverage to settle outstanding debts such as the mortgage, and have money left over for your family to survive on. Many brokers claim that a reasonable amount is ten times the amount of your annual salary.
A downside to this sort of policy is that it's renewed every year and gets more expensive as you age. However, if your mortgage is paid off and your family needs less money to survive in the event of your death, you can renegotiate the terms to reflect that. This will result in cheaper premium costs as you age.
Some companies offer a savings version of this policy, which invests your premiums and may allow you to take out loans against the policy if necessary.
Total and Permanent Disability Coverage (TPD): This is another policy to add-on to an income protection policy. TPD provides a lump sum or installments of payment if you are totally and permanently disabled before retirement age. If you have dependents, you'll probably want to opt for an installment program that will provide for them in the long term. As with all policies, read carefully to see what constitutes a disabling situation, as not all disabilities may be covered.
In Conclusion
Life insurance isn't just for the elderly. There are different policies that protect your income and help you to provide for your family now, in the prime of your life. Contact your local insurance agency for more information on one of these valuable policies that will keep your life running smoothly when you're not up to the challenge.
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