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Common life insurance myths

Common life insurance myths

Understanding more about life insurance could protect your assets and help pay off debts if you can no longer work or pass away.

There are many myths around about life insurance so here are some points that you might like to consider.

Myth One: Your life insurance only comes into effect if you pass away.

While it is true that a big benefit of life insurance is that it could help preserve the financial situation of your loved ones if you pass away, life insurance can also be of great assistance if you suffer a critical illness, get injured in an accident or become permanently disabled. If any of these things happen and you are unable to work, life insurance could help you afford out-of-pocket costs like medical bills and treatment, rehabilitation, loss of income, household bills and rent.

Myth Two: If you’re healthy, you don’t need life insurance.

It’s easy to think you don’t need life insurance if you’re fit and healthy. But if you are planning, or have recently experienced a big life change, such as buying a house, getting married or having a baby, you should consider what might happen if the unexpected were to occur and how you would maintain your family’s lifestyle. It is also worthwhile to keep in mind that if you do experience health issues in the future this may make you ineligible for life insurance cover or attract higher premiums.

Myth Three: If you have private health cover, you don’t need life insurance.

Private health cover can be a big help if you need to go to hospital or encounter certain health care costs, but it doesn’t provide cover for costs such as any rehabilitation you may require, or your mortgage repayments. Life insurance can assist in covering these additional expenses, and help preserve your family’s financial situation, in the event of an accident or if you suffer a serious illness and are no longer able to work. 

Myth Four: The built-in life insurance in your superannuation policy is all you need.

Many super funds offer life insurance for their members. It is important to find out the extent of your cover through your super and whether it would be sufficient to cover all your expenses including future ones, such as your mortgage or school fees, if you could no longer work. If you find you do not have enough cover, you could consider standalone life insurance to cover the gap. 

Things you should know: This web page contains general advice. It does not take account of your objectives, financial situation or needs. You should consider talking to a financial planner before making a financial decision. This web page has been prepared by Commonwealth Financial Planning Limited ABN 65 003 900 169, AFSL 231139, (Commonwealth Financial Planning) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Commonwealth Financial Planners are representatives of Commonwealth Financial Planning. Information in this web page is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this web page, no liability is accepted by Commonwealth Financial Planning, its related entities, agents and employees for any loss arising from reliance on the information contained in the web page