
Life has never been so full of joy but full of responsibility. Between the ages of 35 and 50 Australian families are likely to face a large mortgage on a family-sized home, little mouths to feed and big electricity bills. Not to mention school fees, childcare and a second car (essential for the myriad weekend activities). If something goes wrong, you don’t have a lot of wriggle room.
Statistics from the ABS show that 93% of families with children under five have household debt that is, on average, more than 2.4 times their annual income[i].
Every year that goes by, sees you at increased risk of suffering a major health trauma, such as cancer, heart attack or stroke. Meaning you could be facing an extended period of time out of the workforce without a savings pool to call on.
The loss of a family’s main breadwinner can have a significant impact on the surviving members’ lives moving forward. Ongoing mortgage or rent repayments, credit card debt, education fees and everyday bills still need to be taken care of, even after you’re gone. Even if you are a ‘stay at home’ parent performing ongoing home duties, your loss may require your remaining spouse to pay for services to look after the home and care for your children.
By taking out life insurance, you give yourself and your loved ones the peace of mind that a lump sum will be paid on your death or diagnosis of terminal illness to allow your family to continue to live normally and prevent other assets being sold.
In addition to life cover, there are other forms of insurance to consider falling under the umbrella of ‘living insurance’ including:
An option to consider is funding your insurance through super, which can be done for Life, Income Protection and Total and Permanent Disability.
Whilst only a professional financial planner can tell you whether you need life insurance and if so, what type and how much, it is highly likely by this stage in your life you have the most to lose and the most to protect. Indeed, recent statistics[ii] show one in five parents will be unable to work, or will die before retirement age.
This method not only offers a cost effective advantage, but can also make sure the proceeds are paid in the most effective way if, and when the time comes.
Contribution by Zurich Financial Services
[i]Australian Bureau of Statistics,Australian Social Trends, March 2009, http://www.abs.gov.au/AUSSTATS/[email protected]/Lookup/4102.0Main+Features60March%202009.
[ii] The Lifewise/NATSEM Underinsurance Report, Understanding the Social and Economic Impact of Underinsurance, 2010, http://www.lifewise.org.au/downloads/file/aboutthelifewisecampaign/2010_0203_LifewiseNATSEMSummaryA4FINAL.pdf.