Many people purchase insurance policies to help protect against unexpected life events across Australia. Auto insurance will pay to repair or replace your car if you are in an accident, and health coverage will pay medical bills if you get sick. Life insurance is like other insurance policies. However, the benefits and coverages are unique. Like other insurance policies that protect your health and property, a life insurance policy protects your family. While other policies benefit the policyholder, life insurance pays your family if you unexpectedly pass away.
Life insurance is a part of the overall family financial plan for people across Australia. These policies provide a death benefit to your spouse, children, or other dependents should the unexpected happen to you. Death benefits are paid out as a lump sum and can be used to pay off debts, cover final expenses, provide supplemental income, or take care of other financial obligations. Many Aussies purchase life insurance to provide peace of mind that their family will be taken care of if something happens.
In 1992 the Australian federal government established compulsory superannuation for all people who live and work in the country. This fund is paid into by all employers and establishes an account that provides benefits to citizens when they retire, become disabled, or are diagnosed with a terminal illness. If someone passes away, their super funds are paid out to their beneficiaries. Before 1992, Aussies could purchase all types of life insurance from whole life to term life policies. As a result of compulsory superannuation, life insurance options in Australia are now centered around term life policies. Although term life is the main type of insurance offered today, Aussies still have many options to choose from.
What is term life insurance?
As discussed, before 1992, Aussies could purchase whole life or term life insurance. Whole life is a permanent policy that provides lifelong coverage and a cash value benefit investment. With the superannuation fund, there was no longer a need for policy investment or lifelong coverage, and term life became the most popular insurance option. Term life is a cheaper option for life insurance and provides coverage for a certain period of time. Depending on the policy, you may have the option to renew it at the end of the term and continue to do so until you reach a certain age. Additionally, many term life policies have additional optional coverages.
The main benefit of term life insurance is the death benefit that is paid out to beneficiaries if the policyholder passes away. With many plans, the benefit can increase over time with inflation. Many plans also allow you to choose a level, stepped, or hybrid premium option. This means that you can pay a set premium or choose a variable payment that increases as you get older. Additionally, term life usually comes with a range of flexible coverage options that allows you to adjust your benefits as your situation requires.
What additional coverage options are available with term life insurance?
A life insurance policy is meant to provide financial protection for your family if something happens to you. Aside from the death benefit, however, there are other coverage options that you can add to your policy. Total and permanent disability insurance can provide a payout to provide financial assistance if you become disabled and cannot work. Trauma insurance or critical illness coverage will provide a lump sum if you suffer a critical illness or injury that prevents you from working. Also, income protection insurance will help supplement your income if you can’t work during an illness or injury. Aside from this, you may also get optional coverages for your children.
If you live in Australia, term life is your best option for life insurance coverage. To find the best rates and coverages for your needs, you might want to compare quotes to explore all of your options.