Explore Life Insurance

Taking out life insurance for your family could be one of the best decisions you ever make in life.

Should something happen to you, receiving a lump sum of money could help them pay living expenses.

So, let’s explore what life insurance is, how it works and why thousands of Australian families find it so valuable.

Is there such a thing as family life insurance?

While there’s no such thing as a product called ‘family life insurance’, you can take out term life insurance to cover members of your family.

A term life insurance policy may pay out a lump sum to your beneficiaries if you, or anyone covered by the policy, pass away or are diagnosed with a terminal illness. This means everyday expenses (mortgage repayments, school fees, household bills etc.) could get paid.

What types of life insurance are available?

Australians can choose from the following life insurance options:

  1. Term life insurance. This type of policy can pay out a lump sum to your beneficiaries (i.e. family) if you pass away or you’re diagnosed with a terminal illness.
  2. Total and permanent disablement insurance. This type of policy can pay a lump sum to you (the policy owner), if you become disabled.
  3. Trauma insurance. This type of policy can pay a lump sum to the policy owner, if they suffer from a certain condition (i.e. cancer, heart disease or an accident).

Beside the above cover, different policies may include other benefits like funeral cover, child cover (may cost extra), financial planning services and grief counselling.

What doesn’t life insurance cover for families?

A life insurance claim may not be paid if it’s the result of an event or condition that’s excluded by your policy. It’s important to read your Product Disclosure Statement (PDS) and policy document to find out exactly what’s covered in your policy.

For example, if you’ve taken out a total and permanent disablement (TPD) or trauma insurance policy, it typically won’t pay out if you or family member(s) have become disabled as a result of an intentional, self-inflicted act or attempted suicide.

It’s also important to remember that not all life insurance policies cover children. If you want life insurance for kids, you may have to add on child cover separately, at additional cost.

What family expenses can life insurance help cover?

Life insurance can help cover costs when your family is left with one less income. There may be several immediate expenses to pay for, such as hospital or funeral costs. On top of that, there are also long-term expenses life insurance could help cover, including:

  • childcare/education
  • food and clothing
  • medical requirements
  • mortgages and loans
  • household bills.

Disabled father covered by family life insurance

Can I take out life insurance for my child?

Life insurance for children? While you can’t take out a standalone policy for children under 18, you can add them to your policy. Depending on the policy, it may cost extra to add child cover to your policy.

If you decide you require life insurance for your children, you need to organise cover in advance that would help cover medical expenses should they ever become seriously injured or ill. Life insurance for kids can typically cover death and terminal illness. In addition, some policies may also cover:

  • certain medical events (e.g. loss of sight or speech, paraplegia); and
  • carer benefits (e.g. $5,000 if you must stop full-time work to care for your child from home, should a medical practitioner say it is necessary).

However, it will vary depending on your policy and insurer, or be subject to specific terms and conditions. For example, your policy may not cover cancer (unless it’s at an early stage), heart attacks, strokes or any known pre-existing conditions that led to your child’s terminal illness or death.

How much life insurance cover does my family need?

Raising a family is expensive – especially when one parent is no longer around. That’s why it can be essential to make sure your policy provides enough money to cover your family’s expenses, should you choose to get insured.

According to our life insurance calculator, you may wish to consider around $1,000,000 in life insurance cover if you have:

  1. an annual income between $81,000 and $100,000;
  2. two children between three and 13 years of age; and
  3. a mortgage between $250,000 and $500,000.

However, when calculating how much life cover your family needs, you may also  consider:

  • any outstanding debts;
  • your family’s regular expenses (i.e. education, childcare, living costs);
  • any superannuation, savings, investments and assets to support your family;
  • whether you have life insurance through your superannuation fund; and
  • whether you want to cover the costs of your funeral.

Family expecting a newborn baby

How much can life insurance cost for a family?

The cost of life insurance in Australia will depend on many factors, including:

  • whether you’re insuring one or both parents;
  • whether you require cover for children;
  • the age, health, lifestyle (i.e. smoking status) and occupation(s) of those being insured;
  • the level of cover chosen;
  • sum insured or benefit amount (i.e. how much money is paid out);
  • policy features (additional cover, special conditions); and
  • premium structure (i.e. stepped vs level premiums).

For a clear picture, get a life insurance quote.

Can I take out life insurance for another family member?

Life insurance can cover either the person who takes out the policy, your partner, or the two of you (with a joint policy).  However, if you want to take out life insurance for a family member, you can only do so with their knowledge.

Insurers may require a signed and verified personal statement about the insured family member’s situation (age, health, occupation) to assess their insurance risk.

How do I get a life insurance quote for my family?

You can easily compare life insurance quotes for your family in seconds through us. Just answer some questions about your situation, and we’ll show you several options side-by-side, allowing you to compare prices and features of policies we offer.

The information provided here is general only and does not consider your personal objectives, financial situation or needs. Before you decide to purchase a product, it is important to read the relevant PDS.

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