Life insurance is an umbrella term for different types of personal insurance cover. Many people think it’s only for long term and dramatic life changes – death or becoming totally and permanently disabled. But it can also help in short-term events too, like illness and injury.

1. Life insurance can provide a safety net

Just as you would insure your home and contents, your car, or your health, you can also help to protect your life and your lifestyle. No one likes to think about getting sick or no longer being around to provide for those who need you most. But when these things happen, life insurance can help relieve some of your family’s financial stress. Life insurance can provide a lump sum payment to you if you’re diagnosed with a terminal illness or to your beneficiaries if you pass away.

Other types of life insurance, like Trauma or Total and Permanent Disability (TPD) can mean the difference of you keeping your financial independence, while recovering or adjusting to a life-changing health event.

2. Life insurance doesn’t have to be costly

How much you’ll pay for life insurance depends on a number of factors including the level and type of cover, your age, gender, health and lifestyle. The good news is, for many Australians, the cost of life insurance is generally more affordable than you might think.

Here’s an example of a life insurance quote for a 40-year-old:

Life insurance
$560,000 (Life)
$230,000 (TPD)
Annual premium^

Here’s an example of an income protection quote for a 35-year-old:

Income Protection
$4,800 per month
Waiting period
30 days
Benefit period
2 years
Annual premium^

^This is an example only and is not a quote. Premiums may depend upon factors that include the type and level of cover selected, payment frequency, the insured’s gender, age, smoking status, health history, employment situation, occupation type, hours worked plus any indexation increases, and any discounts that may apply. You may be required to take a level of cover sufficient to meet the minimum premium. Acceptance is subject to meeting eligibility criteria and underwriting requirements.

3. Even if you’re young and healthy, life insurance is still important.

The cost of life insurance is based on your state of health at the time you take out the policy.

Taking out life insurance while you’re young and healthy can make it more affordable overall. That’s because premiums are generally lower when you have better health, as you’re considered less of a risk.

4. Life insurance can be for every life stage

Life insurance isn’t just for people with young families. It can be an important safety net at other times too – like when you’re buying a home or starting a business. And if you’re older, life insurance may help a health setback from having a big financial impact on your retirement savings – or leaving your loved ones with a funeral bill that they have to dip into their savings to pay for it.

It’s true that not everyone needs every type of life insurance. If you’re young with no debt you may not need insurance that pays benefits if you die. But you might want to look at protecting your income.

If you’re ill or injured and can’t work for a while, income protection insurance can assist you to stay financial independent by helping you pay your bills.

5. You’re probably already paying for life insurance – but it may not be enough for your needs.

Most superannuation funds include a default level of life insurance. If you look at your super statements, you’ll see that life insurance premiums are deducted from your balance. The good news is that you probably have some cover. But you should still consider whether the insurance with your superannuation will be enough for your needs.

For example, while Death, Total and Permanent Disability (TPD) insurance cover is common, not all super funds offer income protection. Trauma insurance, which protects against serious illnesses and injuries, isn’t allowed within super for new members.

What’s more, the benefit paid from your life insurance may not be enough to cover your family’s financial needs if you were no longer here to support them. That’s why it’s important to look at the life insurance you already have – and compare it with what you’d need if you got sick, injured or passed away. You may decide you want to increase your cover within your superannuation, or look beyond your super fund to find the cover you need.

If you need a hand understanding and choosing the right protection for you, a qualified financial planner can help. They can review your situation and compare a range of products from various providers to help you find cover best suited to your individual circumstances and budget. Each plan is tailored so costs vary, but your financial planner will clearly explain the costs involved up front.

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This article is intended to provide general information of an educational nature only. The information has been prepared without taking into account your objectives, financial situation or needs. You should, before acting on this, consider the appropriateness to your circumstances and read the relevant Product Disclosure Statement and Target Market Determination before deciding to acquire any product.