Why Do I Need Life Insurance?
There are plenty of reasons that people give for not needing life insurance. Some say they’re too young, some say they’re too old and some just simply refuse to believe they need it.
But the truth is that most adult Australian could benefit from having some level of life insurance.
Today we will look at some of the common groups who believe that they don’t require life insurance, and why they should actually consider some cover.
Many young people do not believe that they require life insurance until they are married or have children, but even young Australians without financial dependants can benefit from having cover.
If you were to die due to illness or injury, who is going to pay for your funeral and possible medical bills? Who is going to repay your credit cards, car loan or other forms of finance?
These costs can run into the tens of thousands or more, and burdening your parents with them is not great when they will already be suffering so much due to your loss.
A small life insurance policy of $100,000 can cost a young person less than a carton of beer each month, and it will ensure that no one is burdened financially after your passing.
The case for childless couples is very similar to the case for young singles. You may not have any dependent children to worry about, but ultimately someone will be burdened with the debts and bills that you leave behind.
Another concern is couples who have borrowed money to buy a house together. If one partner died, could the surviving partner afford to maintain the repayments on their own? Life insurance can be used to repay half or even the entire mortgage, removing any financial hardship.
High Income Families
High income families are generally very good at understanding the need for a comprehensive life insurance plan, however there are still many who think they are invincible and do not need cover.
The fact is that high income families often have large mortgages to match their incomes. This is all good and well when things are good, but if one income earning parent is lost, the whole system can fall down and result in major financial pain.
Both partners in any high income family should have sufficient life insurance to cover at least their own half of the mortgage, and preferably enough to repay the mortgage entirely. The same goes for protecting their portion of lost household income.
For empty nesters who have no debts and whose adult children are financially independent, the need for life insurance may seem quite minimal, especially if both partners have healthy superannuation balances.
Whilst this may be true for many empty nesters, there is still the risk that losing one partner could result in financial hardship for the remaining partner.
Some empty nesters also choose to take out life insurance not for their own needs, but to provide a boosted inheritance to their surviving family members as a parting gift.
The Need for Insurance
Different people need life insurance for different reasons. Rather than coming up with excuses why you don’t need cover, it may be wise to consider whether or not there are any areas where life insurance could help.
This article is about life insurance and is general information only. It should not however be treated as factual, as personal advice or be the basis of purchasing any insurance policy. Before deciding on an insurance policy read the PDS carefully and talk to a licensed insurance agent if you need further assistance. MoneyBuddy does not recommend insurance products or provide personal advice in regards to insurance products.