A quick guide to term life insurance and family cover in Perth, Western Australia.
July 18, 2019
They say the only once certain thing in life is death, yet many of us try to ignore the fact that one day we’ll be gone. The problem here is that unless you happen to independently stinking rich your passing could end up adding an extra layer of financial grief and stress to your family members.
Death isn’t cheap
Even the simplest funeral service and cremation has to be paid for by somebody, and leaving others to bear this burden is something few people would want to do if they took a moment to think about it. Add to that any unpaid debts like a mortgage on the family home, which could put those left behind at risk of homelessness if they cannot raise the income lost to cover the monthly costs.
Insurance is the quick fix solution
If you don’t know much about insurance policies perhaps they seem like an extra expense you can do without for now, especially if you are still quite young and things are tight, or you are older but have some cash tucked away to cover what you think the costs would be. Neither is a very practical or particularly sensible approach. In fact, there are many types of life insurance Perth Western Australia providers, with something to suit all budgets and circumstances.
A brief run down on term life insurance
Term life insurance only pays out if you die while the policy is still active. Most last from 10-25 years, although they can be arranged for both shorter and longer periods. If the policy term expires while you are still alive it pays out nothing. There are two main types of term life insurance.
- Level term
An initial agreement is made for a lump sum to be paid to your beneficiaries in the event of your death during its term. Many policies will not raise the monthly payment, but the lump sum payment doesn’t increase either, so you would need to keep this in mind when deciding on figures at the start.
- Decreasing life term
This is a policy intended to be used to settle a major debt, usually a mortgage, should you die during its term. These are generally cheaper than level term insurance policies but the amount they pay out decreases year by year – to reflect the shrinking debt. Consequently, they need to be revisited should you extend your initial mortgage.
This is a comprehensive insurance option which is designed to pay a regular tax free income to either the holder (in the case of their long term disability) or their family should the policyholder die. This is intended to help cushion the long term financial blow the loss of one parent can bring, and can be set to run for a number of years afterwards. Most policies also cover the cost of special treatment should a child in the family become seriously ill.