Life Insurance – The appropriate amount of Insurance is different for every individual. The amount that you require will depend on you and your family’s particular needs and circumstances.
Scenario: John is 35 years old, earns $75,000 annual salary and is the sole provider for his wife and 2 young children. John has a $350,000 mortgage on his family home, and a $35,000 car loan. John has some standard Life insurance inside is superannuation fund for the sum of $250,000. However, on John’s 36th birthday this cover will decrease to $175,000.
In the event John unexpectedly passed away or became terminally ill, the aim of John’s life insurance should be to clear the family debt of $385,000 and ideally provide a replacement income stream sufficient to ensure his family does not suffer financially for future years to come. John would also need to consider the effects of inflation and increases in the cost of living, which can be difficult to predict accurately.
After discussions with his financial adviser, he has indicated that he would like to have $10,000 to cover funeral expenses, an income replacement for his family for 15 years x $75,000 pa= $1,125,000 which will maintain his family’s lifestyle and take care of his grownup children and their educational needs. John also wishes to clear their total debts of $385,000 which would protect the family home and give John peace of mind. The total sum required for John’s Life insurance is $1,520,000.
After looking at John’s personal needs, objectives and circumstances, John’s financial adviser has recommended John replace the existing standard Life insurance of $250,000 held with his superannuation fund provider as this cover is decreasing and does not cover his needs and take a new Life policy with a quality insurance product provider for the sum of $1,520,000.
Total and Permanent Disability (TPD) – The financial impacts of becoming disabled can be catastrophic for you and those you care about. You may be faced with significant ongoing medical costs, as well as ensuring sufficient income to support you and your family. As such, the amount of cover you need can be significant, making it even more important that you get the best possible advice.
Income Protection – The maximum amount you are able to claim is 75% of your annual income. For business owners, this equates to whatever your income is after business expenses, but before tax. The amount of Income protection you require will depend mostly on you and your family’s monthly expenses and/or cost of living.
Scenario: John earns a total salary of $75,000 including tax per annum. He wishes to gain the maximum monthly benefit amount allowable to him to cover his monthly living cost. Your financial adviser would use the following equation to calculate your maximum monthly benefit allowably $75,000 x 0.75 / 12= $4687.50.
John could apply for an Income protection policy with a monthly benefit of up to $4687.50.
Trauma Insurance – Generally speaking, the average cost of treating a Critical Illness in Australia is approximately $100,000 in medical expenses alone. You may need more or less coverage than this depending on your personal circumstances.
GI Advisers specialise in helping Australians determine an appropriate level of Insurance cover for their personal circumstances. For assistance in determining your appropriate levels of cover, please contact us or complete a quote online.