Life Insurance – Understand Your Options

Australian Life Insurance – Understand Your Options

Losing a loved one prematurely is devastating for any family because of the emotional impact that follows.

However, when the person who has passed away was providing for the rest of the family, the financial impact could be just as serious.

The amount of money your dependents would need to continue enjoying their current lifestyle can be staggering, and when you factor in inflation and other income increases, this would be a cause for anxiety. It would probably be impractical to attempt to save so much money, which is why an life insurance policy may be necessary.


The factors affecting the purchase of life insurance policies changed dramatically since whole life insurance got scrapped off as one of the life cover options that were available. When superannuation became compulsory for workers, they no longer needed whole life insurance because they got similar protection as they would from whole life insurance and at a far lower cost. This dramatically changed the life insurance industry as well. Superannuation is a government-sponsored retirement plan that is meant to invest compulsory contributions made by your employer cut from your salary.

Life insurance cost

You can top up your death benefits from superannuation with term insurance or purchase term insurance separately from a life insurance company in case you don’t have superannuation. There are certain considerations you need to keep in mind if you intend to get life insurance as part of your superannuation fund. Cash flow is probably the greatest concern since you will need to make payments for the policy premiums. Fortunately, if you joined the super fund through your employer, you are likely to enjoy a much lower life insurance cost since you will be covered under a group policy as opposed to an individual policy.


If you have children or other dependents, it is important to know exactly who will receive the life insurance payout. In addition, you should find out where your super benefits will be directed if you die prematurely. Nominating your beneficiaries is critical to ensure that the insurance benefits do not go to someone you did not intend. Note that insurance payouts to non-dependents are subject to hefty tax bills, while those made to your dependents are tax-free.

Disability cover

Find out if your life insurance cover also includes disability insurance. If you become disabled due to injury or serious illness, the financial impact this could have on your family could be just as devastating as losing your life. Fortunately, most life insurance policies from superannuation include disability cover in the package. In addition,find out whether the super fund provides for income protection insurance in case you are unable to work for a period of time due to illness or injury. Read: How to get Cheap Antique Auto Insurance

In many cases, the life insurance cover provided through your superannuation fund is not enough to adequately protect your family. If possible you can opt out of the basic life insurance provided and purchase your own term life insurance. There are many reputable life insurance companies that provide term life insurance that is cost effective and able to meet all your risk protection needs.