News < Back To NEWS

Hi Team,

Life insurance is something that I have personally wrestled with for most of my adult life. I know and fully understand the necessity and importance for having a well thought through life insurance policy, but I have constantly struggled with paying the significant and always increasing premiums year in and year out. But at the end of the day, life insurance is not about me, it's about my family and the people I love. 

If you have a family or people that depend on you, it is extremely important that you insure against not being able to earn an income or paying off your house mortgage. Life insurance protects your family from financial difficulty after an unexpected event, like an illness, injury or death.

"Buying life insurance is like fixing a leaking roof. The longer you wait the more expensive it gets."  Unknown

There are different types of life insurance cover.

• Life cover - also known as 'term life insurance' or 'death cover', pays a set amount of money when you die. The money will go to the people you nominate as beneficiaries on your policy.
• Total and permanent disability (TPD) cover - pays a lump sum to help with rehabilitation and living costs if you are totally and permanently disabled. (TPD is often sold together with life cover.)
• Trauma cover - provides cover if you are diagnosed with a certain illness that has a significant impact on your life, such as cancer or a stroke. It is sometimes called 'critical illness cover' or 'recovery insurance'.
• Income protection - replaces some of your income if you are unable to work due to injury or sickness.

You can purchase life insurance directly from most insurance companies or through your superannuation fund. Financial advisers and accountants also offer life insurance policies to their clients, but the premiums can vary significantly due to incentives and commission structures built into many policies. Taking out a life insurance policy is a significant long term financial commitment, so I strongly recommend that you do your homework and get several competitive quotes before you sign up.

"Your most powerful financial asset isn't your home, it's your ability to earn an income",  Scott Pape

The biggest question is how much life insurance do you need?
The answer to this question varies greatly depending on your individual circumstances, such as your age, if you have children and their ages, your financial commitments, your income level etc. The barefoot Investor recommends that for the average middle class family with two kids and a mortgage, you should have  life insurance worth 10 to 12 times your annual income. A good way to work out how much life insurance you need is to use the"Life Insurance Calculator" on the ASIC moneysmart website (see link below).

https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/life-insurance-calculator

PS: Because I have been away for a couple of weeks, we are overdue for a DDB Team Meeting, so it will now be held on Friday 7th June.

Thanks again for reading,
David