How much insurance do you need?
It’s one thing to decide to get Life Insurance but how do you determine just how much you need? We all know that the more insurance gives us more protection but it also increases costs. It’s all about balancing what you can afford and future needs, it’s a trade off and taking the right approach
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 18 Jul 14
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It’s one thing to decide to get Life Insurance but how do you determine just how much you need? We all know that the more insurance gives us more protection but it also increases costs. It’s all about balancing what you can afford and future needs, it’s a trade off and taking the right approach
Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
How much life insurance you’ll need depends largely on your personal situation, what you want and also, what you can afford.
It can be hard to discuss with your family what they will need most if you die, but it’s worth it for the peace of mind in knowing they will be adequately cared for if the worst happens. And the bonus is that if you know what your family needs, you’ll be better prepared when you start to shop for the insurance cover, or call your insurer to change your cover.
First, you need to think about what cash you will have if you or your spouse died or became disabled. What money do you have in superannuation, shares, savings and existing insurance policies?
Then think about the needs. How much do you need to repay your mortgage? What would you need to clear all debt – particularly, business debt? What would you need to ensure all children can be educated in the way you want them to be educated? Are there lifestyle aspects – do you want to make sure holidays are funded? And how much investable cash is required to provide an income for the surviving spouse or dependents?
The difference between what you will have in existing funds, and what you would like your family to have, is the amount of insurance cover you should get.
It can be a trade-off between what you would ideally like and what you can afford.
Remember, life insurance offered by your super fund is often much cheaper than through other providers, but that is one-size-fits-all cover and may not suit your family’s circumstances and needs.
As always, the more research you do and questions you ask the better, and it may be wise to seek professional advice.