DEATH COVER
Eight Suppliers - multiple options
Death cover is all about looking after your survivors if you die immediately or if you are terminally ill (definition see below), allowing you to settle your estate while you are still alive and able.
Life insurance that pays on death or being diagnosed as being terminally ill (expected to die within 12 months), for the newer style of policies, normally comes in two forms -
A lump sum benefit or
A monthly annuity for a period of years (such as Family Protection/ Income continuance benefit).
LUMP SUM COVER
To establish a sum assured there are a number of things we look at. Some of these include:
- What is your core debt? Mortgages, loans etc
- How long will you need insurance for? Is it short-term or long term?
- What is the financial loss to your family by your premature death (factor of future income).
- What are your expected future costs? Schooling, and other contingencies.
- Have you given personal guarantees to anyone?
- Would you want your retirement plans cancelled if one of you died prematurely?
The benefit can be structured in a number of ways such as stepped premium (increases each year with age) or level for a selected period (10 years, to age 65/80 etc). Bear in mind that "level" does not necessarily mean level for the term if you have also asked for the sum assured to be indexed by CPI or some other percentage. You can also have the sum assured reducing if required.
MONTHLY ANNUITY.
As option to lump sum cover or an increase in lump sum cover, we can offer a benefit that pays a specified sum assured, usually monthly, (can increase each year on claim) for a period of years (1/2/5/10 years or more) or to an age that the life assured would have lived to (say age 65).
To establish a sum assured we can look at the monthly budget requirements wanted by your survivors to cover ongoing costs (food on the table, power etc). The benefit can increase each year on claim to cover inflation.
This tends to be a slightly cheaper form of life insurance and the potential payout may be more than lump sum cover in total. If a survivor is not comfortable in investing a lump sum from a life insurance policy (i.e. after core debt is paid) then this style of benefit can be beneficial. It gives your survivors the security in that each month, a tax free amount is deposited into their bank account for the term of the claim. They can go to work, stay at home and each month the sum assured is paid, giving peace of mind.
OTHER FEATURES OF LIFE INSURANCE
- Funeral benefit - allows your survivors to be immediately paid a part payment (typically $5000 to $10,000) of the sum assured to pay funeral costs, funds to get loved ones home etc.
- Special Events Increase - allows you to increase the existing sum assured within limits if you have a child, increase a mortgage, buy a house, etc. There are a number of criteria that comply.
- Optional Future Events Increase- an extra priced option that allows you to increase the sum assured by a fixed amount or percentage (subject to maximums) regardless of future health without underwriting.
- Other features available - feel free to ask.
THINGS TO BE AWARE OF WITH LIFE INSURANCE
- Death by accident only offers. Some major credit cards, Store offers etc will offer you cover for death by accident only. We have no problem for this cover to be added to a "death by any means" benefit if you feel it is necessary (high risk occupations etc). Statistically the chances of dying by accident are about 6% of all deaths per year. Unless you have some major medical issues we would always want our clients to be covered for "death by any means". This can include suicide after 13 months but I know of no client that takes out a life insurance policy with the intention of committing suicide after 13 months.
- Joint Life/First death Policies. If you and your spouse/partner are insured on one policy and you both die in the same event, these will only pay one sum assured (i.e. not a combined benefit). These policies are typically sold via banks and for a few dollars more you can select a policy that would pay a combined sum assured if you both died. Another issue with Joint Life/First death policies is that the survivor of a death event no longer has insurance cover in place after a death claim for a spouse/partner. They may then be in a position where they may not be able to get life insurance or get it but at substandard terms due to medical issues.
- Having a high a sum assured at level premium. We have no problem with clients having a portion of your needs for life insurance structured under a level premium structure. We would typically split out your minimum needs for the long term (15 to 20 years or more) and look at this being structured under a level premium option, but any additional cover needed for a shorter term should be at a "rate for age" option. This is a cheaper option in the short term.
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