How does term life insurance work
Term life insurance works by paying a lump sum on your death or diagnosis of terminal illness.
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Payment means that if you are no longer around your family will be financially supported. It also means that your loved ones can focus on supporting each other in times of extreme grief, rather than worrying about how they will pay the bills and manage other expenses.
Do you really need cover?
None of us like to contemplate our own mortality, but none of us know what the future holds. According to a study by LifeWise and Natsem*, 1 in 5 families will be affected by the death of a parent, a serious accident, or illness that leaves the parent unable to work. Sadly, 8 Australian families lose a working parent every day.
It's not worth taking the risk that your family won't be among them. Talk to your financial advisor to ensure the safety of you and your loved ones.
*Source: Lifewise/Nutsem Underinsurance Report - Understanding the Social and Economic Cost of Underinsurance, February 2010.
How much cover should you have?
It is important to have the right level of life insurance.
A starting point to consider the level of cover that is right for you may be the total amount of debt you currently have, including your home loan. Then think about how much your family might need to maintain their current and future lifestyle, based on your current financial resources.
nominating a beneficiary
Life insurance helps ensure that your family can continue to live the lifestyle you had planned for them, even when you are not here. It is important that you nominate a beneficiary as part of your policy, so that you can ensure that benefits go to the people who matter most to you.
It is common for people to nominate a beneficiary who is financially dependent on them, such as a spouse or partner (either personal or business) or young children. There are rules that govern who you can designate as a beneficiary of the insurance held through your super fund. However for covers placed outside super, the nominated beneficiary can usually be an individual, corporation or trust. If you choose to nominate more than one beneficiary, you must specify the percentage of benefit that you want each individual to receive.
source:bt.com.au only information purpus.