This post from Life Insurance Comparison

This post is a timely one to share from Life Insurance Comparison. We’ve had to deal with the legal and financial ramifications of my father’s passing and it has shone a light on the need for us all to safeguard our futures.  You never want to think about life insurance or what might happen if there is serious illness in your family – trust me, I’m with you there. But given what we’ve just been through, it is vitally important to consider all options and look at putting safeguards in place to protect you and your family, should the worst happen.
I’ll hand over to Life Insurance Comparison to explain the rest…

Coping with the serious illness or death of the main earner in the household can be a hugely traumatic time for any family. Even more so when the stress is compounded by worry about how your family will cope financially if they are not able to earn the income that you have come to rely on. None of us really know what life will throw at us so it is wise to plan for the future so that the financial side of things comes as less of a shock.
In this post, we’re looking at the potential implications of unexpected health-related setbacks and disasters on family finances and how you could look to protect yourself against them.

The Financial Repercussions of Illness and Death

For most families, losing the income of the main breadwinner would have a devastating impact on the ability to keep meeting your regular outgoings, such as mortgage payments, bills and day-to-day expenses, even if this is not a permanent proposition. You may assume that you will get support from the government to tide you over but in reality, you may get a lot less help than you had anticipated. If you don’t have savings to fall back on, staying on top of your regular expenses could become a real problem. As a worst case scenario, you could fall behind on mortgage or rent payments or get into significant debt.
If the main earner were to die, there will also be funeral costs to factor into the equation. These can be quite high and in the event of an unexpected situation, you may not have seen fit to budget for this. The burden of paying for funeral costs will then fall onto those left behind and can be a further financial blow at a time when you are already grieving and may also be worried about making ends meet.

How Life Insurance Can Help

If you are concerned about how your family would continue to meet regular outgoings if the main earner becomes ill or dies, you might want to think about life insurance. Many people think of this as something that only comes into its own if the policyholder dies but it can also be extremely useful if they are unable to work due to ill health or disability.
Don’t automatically assume that any life insurance attached to your superannuation fund will be sufficient enough; in the vast majority of cases, it will be woefully inadequate for the needs of the average family and would still leave you in a precarious situation if you don’t have additional life insurance protection.
There are several types of life insurance products available, each of which have their own benefits:
Income Protection Insurance: If the policyholder is unable to earn an income due to ill health or disability, this type of life insurance will provide a proportion of their salary (usually up to 75 per cent) to help you to continue to meet the bulk of or all of your outgoings.
Trauma or Critical Illness Insurance: If the policyholder develops one of the illnesses or medical conditions that is covered by the policy, they will receive a lump sum that can be used to pay outgoings and treatment during their recovery.
Total and Permanent Disability (TPD) Insurance: TPD cover will provide a lump sum payment in the event that the policyholder becomes permanently disabled and is unable to earn as a direct result of this.
Life Insurance: General life insurance is the type of policy that is most commonly associated with life insurance and will provide a lump sum payment if the policyholder dies. This can be used by the rest of the family to pay for regular expenses. With this type of cover, it’s important to think long term when you are deciding how much life insurance to buy.

Planning for the Future With Life Insurance

If you don’t have much in the way of savings or you’re not able to build up a big enough buffer to see you through an unexpected illness or death in the family, life insurance is a wise move.
Think about the type of cover that would be most beneficial for your family. Are you more concerned about the prospect of covering outgoings if the main earner in the household gets ill and cannot work? Or are your fears based around how you would cope financially if the breadwinner were to die?
Once you decide which type of cover is most important for your future, it’s time to think about how much cover you’ll need to be comfortable if you need to put in a claim. Factor in all of your family’s current expenses, plus expected future costs such as childcare, education and health. Ideally, you’ll want to buy as much life insurance cover as your budget will allow.
At LifeInsuranceComparison.com.au, we compare 13 of Australia’s major underwritten insurers. Compare life insurance policies and find a policy that meets your needs at the right price.
Disclaimer: Life Insurance Comparison is a sponsor of the blog but I received no monetary compensation for hosting this post. I’m sharing this information as it’s a timely reminder for us all to think about the future.