Families need to consider taking out family life cover
Losing the main breadwinner in a family can be stressful for a family. If they have taken a life insurance policy before they have passed on, a lump sum will be paid to the family to ensure that they are taken care of financially. However, a standalone policy might not be sufficient to handle the ongoing costs that might arise, especially if a family member falls critically ill. 38% of Australian families are underinsured when it comes to protecting their families. Family cover ensures that should any additional costs arise that won’t be paid by the standalone policy will be taken care of. Should your partner or spouse have to stop working their income will be taken care of, leaving them with one less problem to worry about.
Knowing if you are eligible for family life cover?
If you are planning to start a family or already have a family then you are eligible for family life cover. If it is just you and your spouse and there are no children in the picture you can still take out a policy to protect your loved one. Family cover can be taken out as a joint life insurance policy that protects the policy owner and their spouse, or as an additional benefit for a child or spouse.
Taking out adequate cover
Before you take out family life cover it is important that you consider the ongoing costs that come with the passing of a loved one. Especially if they are the breadwinner. This will ensure that you take out adequate cover which doesn’t see you being underinsured when you need it the most. Many families fail to get the right cover for their families.
The average middle-income family in Australia with two children ensure their family with $258,000 worth of life insurance. The typical family needs $680,000. This is a $422,000 shortfall. You will have to consider your family’s situation, along with the ongoing costs that they will have to deal with when you pass on.
Check the flexibility of the policies features
Not all policies are created equal. When it comes to taking out family life cover the most important thing that you can do is compare its features to find something flexible. Most policies will allow the flexibility of adding on another beneficiary when you are extending your family, but you can look at other features such as:
- Range of medical conditions that are covered. This will help you know whether your policy covers a range of different medical conditions in order to protect your loved ones.
- The number of children covered. Does the policy have a limitation to how many children you can cover?
- Inflation protection. Will the amount you have insured for your family increase with inflation? This usually increases by 3%-5% on the anniversary of your cover.
- The maximum sum that can be insured. Some policies have a limited amount in which you can be insured for. Some insurers limit the average cover from $300,000 – $1,000,000. Checking this figure out will help you know if your family will get adequate cover.