Are you considering taking out a life insurance policy? Life insurance is a good way to protect your loved ones if something happens to you, but often younger people don’t see much value in cover. If you are wondering what is the best time to purchase life insurance, read more about the types of life insurance and when to take out a policy.
What Are The Types Of Life Insurance?Many people think of life insurance as an insurance policy for when you die. But there are other types of insurance that fall into the same category and are designed for different situations.
Life insurance provides financial support to your loved ones when you die. You can choose beneficiaries who receive a lump sum payment. This cover can assist your family to pay for the mortgage on your home, support your dependent children, and pay off any debts you have.
Income protection insurance policies cover you if you are unable to work due to illness, injury and other factors. It is normally paid at a rate of 75 per cent of your pre-tax income in monthly instalments. Income protection can be very beneficial for people who don’t have access to sick leave and other leave entitlements, such as self-employed people.
Total and Permanent Disability (TPD) insurance can assist in paying medical expenses in the event that you become totally and permanently disabled. This type of insurance can also help to pay for everyday living expenses.
Trauma insurance, also known as critical illness insurance or recovery insurance, provides cover if you are serious ill or injured. It can be used to pay for medical care, rehabilitation, therapy, and special transport.
When Should I Purchase Life Insurance?As a young person, you may not see much value in life insurance and the other related types of insurance that are designed to protect you if you pass away or suffer a serious illness or injury. However, if you have any people who depend on your income to maintain their quality of life, it is a good idea to consider taking out a policy.
Many people will purchase life insurance, income protection insurance, TPD insurance or trauma insurance when they have children. Raising kids can be expensive and without your income, your partner may struggle to do it alone.
If you work in a more dangerous industry or your style of working doesn’t give you sick leave, insurance is a good idea to ensure you’re not left caught out paying for your own recovery with no income for an extended period of time.
It’s worth remembering that life insurance policies generally get more expensive as you age. With this in mind, it could be worth taking out cover earlier when you qualify for lower premiums. As you age and your chances of developing health problems increase, many insurers will charge you more for a policy, or disqualify you altogether.
How To Choose InsuranceMost people will not have all the types of insurance listed above; it is more common to choose one or two policies, or bundle them together for a better deal. If you’re on a budget, it’s a good idea to pick just one type of policy depending on your circumstances.
Some of the key things to consider when choosing an insurance policy include:
· Your income
· Your partner’s income (if you have one)
· Any dependents you have
· Your living expenses
· Your debts
· Any other assets you have, such as property or investments.