Protecting
13 May, 2015 - 02:46 PM GMT

When is the right time?

Most people understand the value of life insurance in protecting their families if the worst should happen. But a lot of people still put off doing something about it.

Taking out adequate life cover might not be at the top of the list for those in their teens and early 20s, but as you start to move into a more settled life stage and accumulate wealth, it’s important to start thinking about ways to protect that wealth and your ability to earn an income if something were to happen to you.

Some of the key milestones at which you should be thinking about taking out life insurance, or reviewing your existing life cover include:

Marriage

If you’re planning a wedding and you and your partner have talked about having children soon after, you should think about taking out life insurance if you haven’t before.

As well as providing for your children in the event of your death, you also need to think about parenting arrangements immediately after your child is born. What would happen if one parent leaves the work force to care for the child and the working parent gets sick, injured or passes away unexpectedly?

Buying a home

A mortgage is usually the most substantial long-term debt that you will take on in your lifetime. As a result, you will need to think about how your partner, spouse or children would continue paying this debt in the event that you are no longer around.

Starting a business

When you start a business, it is important to consider how the business would continue to run if something were to happen to you.  Could you afford to pay for someone to step in while you are ill or unable to work, and if you were no longer around, how would the business or your business partners be impacted? 

Having children

This is arguably the most important milestone at which you should ensure you have adequate cover. As your children won’t be able to support themselves for at least 18 years, you’ll need to consider expanding your current life insurance policy (if you have one) so that the benefits cover your children for any bills, debts or other expenses they may have to pay on an ongoing basis if something happens to you.

This is particularly important for single parents, or if you are the sole income earner in your family. In the below video, Pina Sciarrone from life insurer AIA Australia speaks to single mum Helen about the importance of protecting her children from financial stress, and the value of seeking out an adviser to help make the right choice about insurance.

(link/embed video)

This provides general information only, and is not intended as financial or other advice. AIA Australia Limited (ABN 79 004 837 861 AFSL 230043)