Life changes—so should your insurance. Whether you've had a career shift, started a family, taken out a mortgage or paid off debt, your life insurance needs evolve over time. Regularly reviewing your life insurance ensures your cover and protection aligns with your current financial and personal situation.

Understanding the different types of life insurance can help you assess whether you have the right policies to meet your wealth protection needs. Let’s look at them below:

What types of life insurance are there?

• Life Insurance – this cover aims to pay a lump sum to your beneficiaries if you pass away, providing financial security for your loved ones.  There are also policies that will pay out in advance upon diagnosis of a terminal illness.
• Total and Permanent Disability (TPD) Insurance – covers you if you're permanently unable to work due to illness or injury, helping with medical expenses and lifestyle adjustments.  There are policies that will cover you if you’re unable to work in the occupation you are trained and qualified in, while others are broader     and only eligible for payment if you cannot work in any job.
• Income Protection – replaces a portion, typically 70 – 80% of your income if you're unable to work due to illness or injury. This cover ensures you can continue meeting lifestyle expenses while you’re not able to work.  
• Trauma Insurance – provides a lump sum if you're diagnosed with a serious illness like cancer or stroke, helping cover medical costs and lifestyle changes.  This type of cover typically covers around 40 different medical conditions and can provide additional protection and peace of mind, to compliment Life, TPD and     Income Protection.

How much insurance do I need?

This is a personal preference and will come down to your specific situation ie a single person may have a stronger need for Income Protection rather than Life insurance, if they have no dependents to provide for.  Whilst a family may need more Life cover to financially provide for young children or a high mortgage balance.

Consider how your finances would be impacted in the different events

i.e. if you weren’t able to work temporarily, permanently or were no longer around – at all what would be the financial consequences for you or the people around you?  

This is a good starting point, then add up your debts like credit cards, mortgage, loans and ask yourself - would you want funds to pay these out, fully or partially in each of the above events.   It can be helpful to write these out and inapplicable, speak with your spouse about what position you’d like to be in if either of you could no longer financially contribute to the household due to a sickness, injury or death.

Fun conversation, not. But an extremely important one to have.

Money is already tight, how can I pay for my life insurance policies?

There are a few options. You can own the policies directly and pay for them out of your after-tax income and add to your household expenses. Alternatively, you can own these policies through your super fund and the premiums can be paid from your super balance or earnings.   They only type of cover that can’t be held in your super fund is trauma cover, and some own-occupation TPD policies.  

If you own an Income Protection policy in your name, and pay the premium costs with after-tax money, the premium costs are tax deductible to you.  Why?  The ATO isn’t that generous.  But, if you went on claim and were paid a monthly income protection insurance, the ATO will treat this as assessable income, which you would be taxed on in the same way your income currently is.

There are few considerations to owning your life insurances inside or outside super, so please learn more or speak with a life insurance specialist or financial adviser.  Need a recommendation, I know some great ones, so please reach out.

Once you have cover, it’s important to review it annually.

Why You Should Review Your Cover Regularly?

1. Life changes impact needs – Marriage, children, a mortgage, or career advancements can all affect how much coverage you need.
2. Premiums and policy features change – Insurers update policies, and better options may now be available.  Some insurers offer discounted rates, or load premiums to be higher depending     on your occupation.
3. Superannuation insurance may not be enough – Relying on default cover through your super might leave you underinsured.  It’s important to work out how much you need and then check what you’ve got in your super fund.  Some funds reduce your cover every year you get older, and you may not want this to happen.
4. Avoid policy lapses– Ensuring your cover is still in place by paying your premiums.

A quick review can save you money, provide peace of mind, and ensure you and your nearest and dearest are financially protected.

A financial adviser’s job is to ask you about life insurance.  

Please don’t make it their job to tell your family you didn’t have it.

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