Death Insurance

How do I determine my life insurance needs?

There isn't one death cover that is ideal for everyone, which is why it is important to assess and compare different policies to determine which plan would be most suitable for you and your family's needs. Here are a few things to consider when calculating the right amount you need:

• You current annual income. Replacing your lost income for the years required
• Short-term and long-term debts. This often includes mortgage, credit card debts, personal loan, and car loan
• Your immediate expenses. This includes food, clothing and shelter (rent payments, if you don't own your home)
• Your children's education expenses. Consider the number of children you have and their respective ages to determine the total amount of expenses
• Emergency funds. Work out how much of your expenses such as a funeral arrangement, medical treatments, legal fees and estate settlement costs can be covered by your savings.

You can use a life cover calculator to give you an indication on how much you may need for a death cover. If you want further guidance, an experienced death cover agent can help you in determining an ideal amount that will match your needs situation, as well as providing tailored advice on life policies that suit what you require.

What forms of death cover are available?

The two main types of life insurance are term life insurance and funeral cover, both of which can pay out the full sum insured on death. If you are not eligible to obtain term life insurance (such as due to medical conditions or age), a funeral plan may be a good option.

Death cover for different life stages

• Early adulthood, age 18 - 35

  You're relatively young and healthy and your premiums are reasonably low. You might be single, or you might have a family and dependents and can find a level of cover to suit.

  As your responsibilities grow you will typically be adjusting your policy and increasing your level of cover later on. Here, additional disability cover with term life insurance can deliver an important extra layer of protection for you in the event of life-changing accident or illness.

• Adulthood, age 35 - 55

  You may be married with children and you might be bearing more financial obligations. Investments and debt can also make up a significant portion of your finances which should be considered when comparing life insurance policies or adjusting cover.

  If you don't have children already, you may be planning for kids in the future, and their age will determine how far ahead you need to plan for their education expenses.

  Disability can be just as significant a concern as death, putting you and your family in a difficult position. With more assets, costs and dependents, as well as your retirement to think about, a comprehensive and versatile life policy can be important in this life stage.

• Pre-retirement, age 55-65

  At this point, if you have children, they will likely have moved out and you would be looking towards retirement. Protecting your investments and assets through life insurance may be an important part of retirement planning, and paying off the mortgage and other debt before retirement is also a concern.

  Don't underestimate the level of cover you might need in order to provide for a long retirement spanning several decades. Consider your children's circumstances when looking at policies, as well as the likelihood of your partner being able to return to the workforce if something happens.

• Retirement, age 65+

  After retirement, your financial obligations will generally have decreased, but naturally so has your income. You can get cover to help you keep up with your plans, such as travelling, in line with your financial capacity. The assets you've spent a lifetime building may need to be protected, and any financial obligations towards your partner or other dependents.

  Estate planning and aged care costs can be worth considering, as are growing medical expenses or costs relating to other health needs. Financial planning might also be important to consider, specifically in the form of estate tax mitigation and budgeting for an extensive retirement with many years ahead.

  Finding a policy to match your budget and help maintain your lifestyle while protecting important obligations depends largely on your circumstances, such as your age of retirement and current income from assets.

Can death cover pay for accidents and injuries?

In the event of a fatal accident or injury, death cover of both types, funeral plans and term life insurance, can pay out, while some benefits may also be available for survivable accidents or injuries, although these are generally only available with term life insurance policies.

• Accident and injury benefits with funeral cover

  With funeral plan insurance policies, you may be able to institute a premium pause in the event of financial hardship, while still retaining cover for accidental death. This can let you stop paying premiums for a limited time, such as 3 months, while still knowing that the policy will pay out in the event of an accidental death.

• Accident and injury benefits with term life insurance

  The accidental death benefit available with term life insurance policies can pay out an additional amount should your death be the result of an accident, in order to help compensate for the suddenness of the event and additional costs that may be associated. This may only be available with term life insurance policies.

  For severe but survivable accidents you may also be able to link additional forms of cover to your policy including:

  • Trauma, serious injury or serious illness cover: In the event of specified health events you can get paid lump sum benefits. The specific events covered will vary between policies, but can include cardiac arrest, cancer, loss of limbs, blindness, heart surgery and many others.
  • Total and permanent disablement or income protection insurance: Should you suffer an accident, injury or illness that leaves you permanently disabled, this type of policy can pay benefits. Depending on the type of cover, disabled might be defined by an inability to work, an inability to perform specific tasks or a percentage measurement of disability based on your physical injuries and loss of function.

What is funeral cover?

Funeral cover is an insurance product that gives your family a lump sum when you die so they can pay for your funeral without worrying about the hefty costs.

If you are in the older age group and have little debt, you may want to consider a funeral plan that will take care of your funeral costs.