Understanding the Importance of Having Enough Life Insurance
There is never a point where someone can have “too much” life insurance. The more you can provide your family, the better. If you have too little life insurance, then you may run the risk of not being able to provide much of anything once you have passed away except a lot of debt. After all, life insurance is there to help relieve your family of financial burdens after you pass away. You may not think that your contribution is that great, but when you take time out to look at it, you will see that you do contribute greatly to your family and that without a life insurance policy, your family may have to unnecessarily struggle.
How Much Do You Need?
The lump sum of money that is offered after the death of the insured person can be used for multiple expenses that life can incur. First, any funeral arrangements that must be made can be paid for with this money. After the death of this person, the income that would normally be provided to the family ceases to come in, making the life insurance sum that much more important for daily living. You may have a debt and mortgage to pay off where the insurance money can come in quite handy. Also if you have children, this pay out may cover the costs of university. When it comes to putting together a life insurance policy, you need to determine how much you need to be covered for. Therefore, most financial advisors would have you take into consideration the four following financial areas:
• Future education costs
• Debt reduction costs
• Major purchases to be made
• General annual income
These are the four financial situations that will determine how much money you should want to leave your family when you pass away. You should take out a life insurance policy that anticipates these events.
When to Get Life Insurance
You should get life insurance earlier on in your life, like when you start a family. In Australia, anyone between the ages of 16 and 65 can take out a life insurance policy of at least $100,000 or more. If you are a resident between the ages of 16 and 45, then you can have a policy that will insure you up to $1,500,000. If you wait until you are between the ages of 56 and 65, the maximum amount that you can be insured for is $500,000. Therefore, to get the maximum amount of life insurance that you need, so that you can cover all of your family’s financial burdens in the case of your death, act sooner rather than later.
Go online and compare prices to find the best policy for your needs. You can never have too much life insurance, but you can easily not have enough. Be sure to go over you requirements with your financial advisor to make sure that you have enough coverage to provide for your family once you are gone.
Medibank Private is Australia’s largest private health insurer and now offers flexible life insurance that can be tailored to your needs.
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