Life Insurance
What is life insurance?

Life Insurance - Most of us have heard of Life Insurance and appreciate that it is an insurance policy, that pays out either a lump sum or a series of payments when you die. These payments are normally paid without the deduction of any tax, and in most instances are tax-free.

The proceeds of an insurance policy can be used:

  • to pay off a debt such as a home loan
  • to provide an income for you and your dependents

Life policies can be combined with other forms of cover, such as trauma insurance and income protection so that you receive the lump sum if you are diagnosed with a serious illness.

What types of life insurance are there?

There are two main types of life insurance:

Stepped Cover

This is the most common form of life cover. It pays out a lump sum if you die. Premiums are related to age, so much cheaper for younger people and more expensive when older.

Superannuation insurance plans

Both personal and occupational superannuation can include an element of insurance if you die before you reach the set retirement age on your pension. Since Superannuation contributions are much more tax efficient, insuring yourself through a Superannuation policy is likely to be one of the cheapest ways of insuring yourself.

If your insurance cover is arranged through your employer's superannuation scheme, you should seriously consider looking into whether this is the cheapest and most suitable super provider to insure yourself through. Many employer schemes are set up to reduce the administration burden on your employer with little thought as to the performance and insurance benefits for the individual.

Since July 2006, you now have the choice to use a Superannuation provider of your own choice. Advice from one of our consultants will allow you to shop around for a Superannuation provider with lower insurance costs, increasing the value of your Superannuation fund as a result and the money in your pocket.