Protecting your loved ones
You’re working hard to take care of your family now – so it makes sense that you’ve already put a financial safety net in place that will protect them if you’re no longer able to provide for them in the same way, by taking out your current life insurance policy.
Insurance can make all the difference - it can help safeguard your loved ones from financial hardship if you become ill or injured, or if you pass away, giving you peace of mind that they’ll always be looked after.
How it works
You pay a premium to your insurance provider on a regular basis – for example, fortnightly, monthly, or yearly. The amount of this premium payment depends on many factors including your age, health, level of cover and even the premium structure you choose.
If you become terminally ill or pass away, then your nominated beneficiaries will receive a lump sum benefit from your insurance policy. They can use this money in any way they need – such as covering funeral costs, paying off your mortgage and keeping up with living expenses.
If you’re temporarily or permanently unable to work because of an illness, disability or injury, you may be able to claim on a lump sum benefit or ongoing financial support (depending on the type of cover). You can use this money to replace your lost income and cover any medical and rehabilitation expenses.
Types of cover
Different insurance policies offer different types of cover, which you might consider depending on your circumstances. Please check your current policy for the cover type that you currently hold. Here are the four main types of cover that may be available:
Death and terminal illness cover
Your beneficiaries can receive a lump sum benefit if you pass away or are diagnosed with a terminal illness.
Total and Permanent Disability (TPD) cover
You can receive a lump sum benefit if you become totally and permanent disabled and are unable to work.
You can receive a lump sum benefit if you are diagnosed with a certain illness, as defined by the policy, such as cancer or a stroke.
Income Protection cover
You can receive financial support if you become temporarily unable to work due to injury or illness by replacing up to 75% of your income during this time.
How much is enough?
According to Rice Warner’s 2017 report, Underinsurance in Australia, when it comes to life cover Australians are underinsured to the tune of almost $5 billion.1
Your financial adviser can help you calculate how much you and your family will need to maintain your current lifestyle, based on a range of factors including:
- your mortgage and other debts
- the income you currently provide
- funeral expenses and legal costs
- the ages of your partner or spouse and your children.
As a guide, you can also use the AMP Life Insurance Calculator to help you work out how much cover you may need.
Because your circumstances change over time, it’s a good idea to review your insurance regularly as well as when a major event occurs – for example, if you get married or start a family.
1Rice Warner, Underinsurance in Australia, 2017.
Greg is 48 years old and runs a small business with his wife, Sue. They have three children under the age of 12, when Greg has a sudden heart attack and passes away. To add to the family’s devastation, Sue is left wondering what will happen to the business and how she will support the kids on her own.
Because Greg took out comprehensive life insurance, Sue receives a lump sum benefit of $2 million. She uses the money to cover the costs of the funeral and clear the mortgage and bills while she tries to adjust to life without Greg and work out what to do next. It’s a relief to her that she doesn’t have to worry about money on top of everything else that follows Greg’s death.
Thanks to the financial support the family receives, Sue is able to take adequate time to make a decision about the business: whether she wants to keep running it on her own, sell it, or hire a replacement for Greg’s role.
As Greg calculated a level of cover that would ensure the same standard of living for as long as the children are still in school, Sue has peace of mind knowing her kids will be taken care of until they achieve financial independence.
Please note this example is illustrative only and is not an estimate of the insured amount you will receive or fees and costs you will incur. This example is based on the following assumptions (a) the cover amount remains the same throughout the period and the policy is not cancelled or suspended and (b) No waiting period applies to the policy.
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Any advice and information on this website is general in nature and is provided by AMP Life, which is part of the Resolution Life group. The advice does not take into account your personal objectives, financial situation or needs. Therefore, before acting on the advice, you should consider the appropriateness of the advice, having regard to those matters as well as the relevant product disclosure statement (PDS), available from AMP Life at amplife.com.au or by calling 133 731, before making a decision about the product. Consider speaking to a financial adviser if you have any concerns.
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