4 things you need to know about Life Insurance
Personal insurance remains one of the greatest areas of misunderstanding in Australia. In some countries you cannot even obtain a mortgage without taking out life insurance. None of us know when our time will be up but it’s important to understand how this cover can be structured to provide for YOUR what-if’s and it only takes 30 minutes for our insurance consultation. For now, we wanted to share some common misconceptions about life insurance in the hope to raise more understanding in this area.
What is Life insurance?
It is a benefit payment received in the event you die. Not nice to think about yet possibly financially devastating for your family if you didn’t plan ahead! Life insurance benefits may be taken as a lump sum payment or an income stream. If your spouse is nominated as the beneficiary it is likely they will receive this benefit tax free. For adult children or other beneficiaries some care and understanding of how tax may apply is important and strategic structuring can minimise any tax implications.
Insurance companies don’t pay.
Insurance companies pay proceeds ALL THE TIME. Time and time again I hear people say “oh those insurance companies won’t pay if I need it”. This is a myth. As an example in 2017* Zurich paid out $208 million dollars to Australians for Life Insurance claims and OnePath paid out $930 million in Life claims alone. The policies we select are of the highest quality with specific features chosen to suit your needs and budget.
Life insurance is expensive.
Not quite true, however I do understand that no one really wants to pay for insurance and many household budgets are already under strain. There are a number of ways insurance can be structured to fit in with most budgets. It can be held in your personal name or via superannuation or even a combination of both. One of the benefits of having cover within super is that you may choose to salary sacrifice and pay premiums with pre-tax earnings.
I don’t need insurance as I have no debt.
Insurance isn’t always established just to repay debts. There are many reasons you may want to consider life insurance. You may be on the countdown to retirement and your retirement plan hinges on you being around to earn an income. You may need to equalise your estate and plan to leave one child a property and leave the other an insurance policy of equal value. You may be in a business partnership and need to cover your share of the business in a succession plan. Perhaps you have a child with a disability to provide for. Perhaps you are the breadwinner and your spouse is reliant on you to provide financially. There are so many reasons why life insurance may be appropriate to your current circumstance.
None of us know when our time will be up but it’s important to understand how this cover can be structured to provide for YOUR what-if’s and it only takes 30 minutes for our insurance consultation. To find out more or to book a consultation get in touch HERE.
This information contained in this document has been provided as general advice only. The contents of this document have been prepared without taking account of your personal objectives, financial situation or needs. You should, before making any decision regarding any information, strategies or products mentioned in this document, consult with your GPS Wealth Ltd financial adviser to consider whether it is appropriate having regard to your own objectives, financial situation and needs