There are compelling arguments that we can pose to anyone who asks, ‘Why should I get life insurance?’ Those reasons differ based on who you are. though, but we’ve listed the most important ones right here.
Your circumstances are changing
Typically whenever you face a big change in your life, it’s a good opportunity to take a step back and reflect on what you have. Here are some of life’s big ‘junctions’:
- Got a new job, received a promotion, or scored a pay rise.
- Marriage, separation or divorce.
- Starting a family (i.e. having kids).
- You’ve bought a home.
Each of these events triggers a drastic change in circumstances. Perhaps it’s a matter of more mouths to feed, or that you finally have money to buy a home. Whatever it is, it’s an opportunity to decide how these assets and family members will be looked after once you’re gone.
Because it’ll cost more later on
When you sign up for a life insurance policy, you can choose between stepped or level premiums:
- Stepped premiums increase every year, but start out a little cheaper.
- Level premiums, on the other hand, do not increase with age – but rather with inflation.
Level premiums are typically more expensive in the first few years, but work out to be much cheaper in the long run. If you decide to get life insurance, consider how expensive your premiums could grow to in 10, 20 years time.
There is another way your insurance could cost you more later on. One of the ways your life insurance is calculated is by health status, and statistically, you’re more likely to have developed chronic health conditions as you age.
There’s a reason that some insurers cut off cover after you turn 65, it’s because it’s a risky age group to insure. But getting covered early on means you might pay less, depending on which premium structure you choose initially.
Ensuring your family’s lifestyle remains the same
Let’s take a look at the cost of raising children in Australia. As of 2013, NATSEM estimates that it costs $812,000 to raise two children. And this is the average cost, with private schooling tallying a significantly higher price tag; if that’s something you want for your kids.
Then, there are the typical living expenses we deal with each week.
- Car running costs: $150 – $260
- Food / take out: $80 – $280
- Internet / phones: $20 – $55
- Power & gas: $35 – $140
- Public transport: $15 – $55
And all of the above are just living expenses. What about trips to movies? Holidays? And what about looking after other relatives (e.g. parents, grandparents)? Making sure ageing dependents are cared for is just as important as looking after your kids.
Finally, you may have always intended to leave an inheritance for your family, so they have the means to do whatever they want to in life.
Protecting your family from your personal debt
The average household debt in Australia stands at $245,000, as of December 2015.1 This debt doesn’t disappear when we die, though, it still needs to be settled. Can your family afford the debt you leave behind? Think about it, could they pay off your…
- credit cards debt
- any personal loans owing
- mortgage repayments (as an owner occupier or investor)
- renovations that still need to be paid for
If any of the above reasons resonate with you, it might be time for you to learn the basics about life insurance. And, if you’re well-read on the subject, check out our life insurance quote comparison service.
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.