Sometimes we don’t think about our life insurance needs until it’s too late. Changing circumstances, rises or falls in income and whether or not the kids are still at home all affect the amount of coverage we need.
Just starting out : Kicking off a career and saving money for your life goals
So you’ve left school, completed a trade or a degree and started out in your progression. You might not be thinking about life insurance at this stage of your life, but ensuring you have the right cover is something you definitely need to consider.
As you’re starting out, you might be thinking more about saving for a home, getting some holiday savings under your belt and enjoying life. But basic life insurance cover will see you on the way to preparing for financial wellness for the rest of your life.
When you’re starting out with life insurance, you need to think about the amount of premiums you might want to pay. Stepped premiums can be more popular for young people, as they start out low and increase year on year. But you will need to think ahead and make sure you can cater for those rising premiums as you get older. The last thing you want is to pay for a policy for 10 or 15 years, then have to cancel it and end up needing a benefit you don’t have in place.
Level premiums can change over time but the increase isn’t affected by one’s age as stepped premiums are, but the upfront cost is higher and are often much more expensive than the stepped equivalent when you first take out cover. Level premiums may increase, but you pay a more consistent amount year on year.
Summary: A basic life insurance cover will see you on the way to preparing for the rest of your life. However, this is a good time to think ahead and make sure you can cater for growing needs as you grow older.
The prime years : Buying a house, moving in with your partner or having children
You’ve got a home (and probably a mortgage), as well as kids and all the costs that come with them, including school and medical fees. When you consider your coverage at this stage of your life, it’s likely that the bare minimum you will aim to cover is the debt on your primary residence. The last thing you want is to leave your family without a roof over their heads.
But you should consider other outgoings – school fees, car payments and so on. And if you’re the primary wage earner and your partner is the primary carer, you may want enough coverage so the children can be looked after until they’re old enough to fend for themselves.
Summary: The bare minimum you want is to cover the debt on your primary residence. But you will also want to consider the outgoings – school fees, car payments and so on.
The golden years : Retirement and beyond
The kids have left home, your house is paid off and you may have investments or be considering retirement. It’s at this stage that you might think about dialling back your coverage, as long as your partner is taken care of in the event something happens to you.
In the golden years, including retirement, you may have enough income to live off and for your partner to survive on. But you should check your income and investments carefully to ensure there’s going to be enough for someone to cover their expenses and have a healthy lifestyle.
Summary: You can think about dialling back your coverage, as long as your partner is taken care of in the event something happens to you.
Changing life events call for changing insurance cover
Life insurance changes as we get older and go through different life stages. It always pays to contact us or a financial adviser about your current life stage – and the coverage you may need.
Use our insurance needs calculator to help you find out how much insurance you need.
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This article was brought to you by MetLife.
The information contained in this article is of a general nature does not constitute financial product advice. However, to the extent that the information may be considered to be general financial product advice, REI Super advises that REI Super has not considered any individual person’s objectives, financial situation or particular needs. Individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation. Members should obtain and read the Product Disclosure Statement for REI Super, as well as the Insurance Guide and consider speaking to a licensed financial advisor before making any decisions. REI Superannuation Fund Pty Ltd ABN 68 056 044 770 AFSL 240569. RSE L 0000314 REI Super ABN 76 641 658 449 RSE R1000412 MySuper unique identifier 76641658449129 October 2021.