Life insurance provides a lump sum payment when the insured person dies or becomes terminally ill. Life insurance cover generally assists to:

  • pay outstanding debts, such as mortgages, credit cards and loans
  • provide income to remaining family members
  • cover medical and funeral expenses.

How much life insurance is enough?

Your financial advisor can assist you calculate how much life insurance you require for your personal circumstances.This will usually take into account a range of short-term and long-term factors such as:

  • your family’s current lifestyle,
  • personal and business debts such as mortgage, loans and credit cards
  • education costs for surviving children
  • your family’s day-to-day living expenses and bills
  • funeral and other expenses.

Where you can choose between a standard or plus life insurance policy, the built-in benefits and options will vary between policies. These benefits and options can also vary depending on whether you hold the insurance within an industry super fund or self managed super fund or hold it privately.

Built-in benefits and options

Built-in benefits and options that may be available with life insurance include:

  • Terminal Illness Benefit. If the insured person is diagnosed with a terminal illness and has less than 12 months to live, part of the life insurance cover can be paid. The remaining life cover reduces by the amount paid under the Terminal Illness Benefit.
  • Future Insurability. The amount of life cover can generally be increased by up to 25% or $200,000 (whichever is the lesser amount) without further medical evidence where certain events occur such as the birth of a child, marriage or growth in your own business.
  • Accidental Injury Cover. If the insured person suffers certain permanent injuries from an accident, all or part of the life insurance cover may be paid out.
  • Accidental Death. If the insured person dies unexpectedly and unintentionally, this option provides an additional payment. This excludes death due to sickness, disease, intentional injury or where the insured person ‘courted disaster’.
  • Terminal Illness Support. This option provides an additional amount to a Terminal Illness benefit payment to help pay for immediate expenses such as medical costs.
  • Premium Waiver Disability Option. This option allows insurance premiums to be waived while the insured person claims income protection, or if they are disabled for a certain period.
  • Business Guarantee. The amount of life cover can generally be increased by up to 25% or $200,000 (whichever is the lesser amount) without further medical evidence where certain events occur such as the birth of a child, marriage or growth in your own business