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Book a FREE consultation
and receive your complimentary eBook

Get started with a free strategy consultation and receive a copy of the Good Fortune Guide – written by James McFall, Managing Director Yield FP and 2020 National Finalist Certified Financial Planner of the Year to help educate you on your Financial Plan.

Is My Life Insurance Right For Me?

is my life insurance right for me and my family
Wealth Protection Your biggest financial asset is probably your ability to provide an income for your family. Your unique insurance cover will not only safeguard you, but the people you love around you.

We were asked to answer this question by Advisor Ratings, specifically on if this person’s life insurance, put in place through their super fund, is right for them. 

“I am 55 years old and have basic life insurance with my Superannuation. How do I know if this insurance will be enough for my Husband and 2 school-aged children if I were to pass away considering I am the sole breadwinner?” -Nicole

Adviser Ratings

Great question Nicole and one you are wise asking as the sole bread winner. The answer lies first in determining the position that you would like to leave your husband and children in if you were to pass away. 

For instance, would you want your husband to be debt free? Would you want to provide for an ongoing income stream to replace your income and if so, how much would your family need? Would you want to allow for specific lump sum expenses such as your children’s education or funeral costs?

When asking if your life insurance is right for you and your family, it is appropriate to think of life insurance as being something for the loved ones you leave behind and leaving them in a position where they can financially absorb the impact of losing you. 

Calculating the amount of life cover that you need can be done by a Financial Advisor. A Financial Advisor will consider your need in context of your overall Financial Plan and this is therefore the most comprehensive approach to understanding your need, as a Financial Advisor will not only consider your income and assets as they exist today, but how they may change. 

There are also calculators that can help too, such as this money smart life insurance calculator, provided by the government. 

Once you have determined the right level of cover, you should be reviewing the market for a suitable cover. A good life insurance contract will cover you against the risk of death, regardless of the cause of death.

Next is to structure your life cover well, so it is paid from your ‘gross’ income instead of ‘net’, keeping the after-tax cost to a minimum. Broadly this means owning your policy in superannuation, as it is tax-deductible in super. 

Importantly however this does not mean that you must own the policy where your super investments are IE: Like you do currently. 

What this means is that you should be comparing the cost of the cover you already have through your super fund with the market, to determine if what you have offers the best value. 

Financial advisors, like Yield Financial Planning Melbourne, pay for comparison software that allows us to quickly compare the market, to identify leading insurance policies that are cost-effective. 

If you choose to get your Life insurance policy through a Financial Advisor, they will typically receive a commission from the insurer, that does not impact the premium you pay IE: the cost of the premium would be the same if you went directly to the insurer, making financial advice from a Financial Advisor about life insurance accessible. 

I would recommend that you read this short Blog that reflects on a survey conducted by Ipsos, that was commissioned by ANZ, that outlines the practical impact that losing a parent has on their children. 

Furthermore, take a look at this short Life Insurance Video to understand more about what Life insurance is and why it is important. 

Important Note
Any information provided here is general advice only and does not consider your objectives, financial situation or needs. This information should not be taken as comprehensive and does not constitute legal or financial advice. You should seek legal, financial or other professional advice before relying on any content. Yield Financial Planning is not responsible to you or anyone else for any loss suffered in connection with the use of this information. Information is only current at the date initially published.
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About Yield - Financial Planner Melbourne

Who we serve – We help time poor professionals and business owners who intuitively know they should be doing more to improve their financial position and are seeking an expert to guide them on financial planning strategies. Our clients want personalised financial planning advice and to feel empowered and confident that they can achieve a secure transition to retirement.

What we do – We gain a deep understanding of your current financial position and preferences, what you value and want to achieve. We then help you develop a highly personalised financial plan, to show you how to make your money work harder for you. Ongoing we regularly monitor and measure progress against your plan projections, to show you how you’re tracking and help you manage change to your advantage.

How we do it – We apply our proven expertise in investment markets (Shares & Property), Tax and Debt structuring, Retirement Planning, Risk management and Estate planning, to help you reorganise the way you use your money to achieve your desired outcomes.

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