Planning for the unthinkable

Life insurance and wills are two areas of financial advice that are difficult for most of us to confront.

In many cases, they involve us committing the time and money to set up arrangements that we hope we will never need to use. However, in the event that something unthinkable does happen to you, life insurance and having a current will can significantly reduce the stress to your family’s life.

If you have been delaying a decision on these important issues, consider the following:

Steve and Linda have a $500,000 mortgage, and a baby girl, Susie. Steve is a customer service manager, and Linda is a stay-at-home mum. One day coming home from work, Steve is in a fatal car accident, and Linda is devastated. In addition to grief, she’s worried about what’s going to happen to her house, and how she will be able to take care of Susie on her own.

Scenario 1: without life insurance

Steve never had a life insurance policy, however, he did have a small amount of cover in his superannuation fund. This was enough to cover funeral expenses, but it won’t cover the ongoing mortgage repayments or provide any support for Linda and Susie going forward. As a result, Linda is forced to move home and live with her parents. She’s had to sell the family home, and will need to go back to work or seek assistance from Centrelink in order to provide for Susie.

Scenario 2: with life insurance

Luckily for Linda, Steve set up a life insurance policy two years ago. Even though at the time he thought nothing would ever happen to him, he wanted to make sure his family would always be protected. Following his death, Linda receives a lump sum payout of $700k: enough money to pay out the mortgage, cover the funeral expenses and provide a few months’ income before Linda will need to think about returning to the workforce. This does not take away the pain of losing Steve, but it does help with stress relief as Linda begins to consider life without Steve.

Paying for life insurance

It can be hard to achieve all your financial goals at the same time, but did you know life insurance premiums can be paid through your super account?

As an example, consider Sam and Hannah. They have just bought their first house and are finding it hard to keep on top of their mortgage payments. Even though they are both working, they can’t afford insurance premiums as well as their other expenses.Arranging cover through their super means the premiums are deducted from the superannuation guarantee contributions.

Sam and Hannah accept their retirement benefits will be lower because they are using their super to pay premiums.  However, they can pay more into super when they can afford it to catch up.

Talk to us

Many of our clients have valued the opportunity to discuss life insurance with one of our experienced financial advisers.  We invite you to do the same.