Life comes with no guarantees. One day, you're healthy, and then you're suddenly down with a serious illness in the next. Of course, no one wants to think about these things. We'd all like to think that we will be strong and healthy for the rest of our lives.
However, life works differently. We therefore need to be prepared for unforeseen circumstances in the future. One way of doing it is by getting life insurance. This is a general term for a type of coverage that we seek to protect our loved ones when the inevitable happens.
Why Life Insurance is Important
Unforeseen events such as sudden death or an accident can be emotionally stressful to the person's loved ones. But by being insured, you take out the additional financial burden that the event might cause. If you meet an accident, for example, your life insurance can help pay for your hospital bills. Or if you die, the lump sum payment may be used to pay for your funeral, your mortgage, as well as the other financial obligations that you leave behind.
Determining the Amount of Coverage You Need
When taking out life insurance, it is important to ensure that the coverage is enough to meet the needs of your loved ones. You need to take into account your family's daily needs, your financial obligations, as well as other future expenses they might require. Because of this, the general rule of thumb when determining the amount of coverage your family needs is to multiply your annual salary by ten, then add to it your total financial obligations (mortgage, credit card debt, etc.), and other financial needs of your loved ones (education, vacations, etc.)
Let's use an example. If you earn $100,000 annually, and owe various lenders about $50,000, you should take out at least $1,050,000 plus the other financial needs we mentioned earlier.
Choosing Your Life Insurance Policy
Different insurance companies provide various insurance policies to meet the needs of individuals. It is therefore important to choose which one is the best for you by studying your options carefully. Remember to not choose a policy simply because it is cheap, since it might not provide adequate coverage for your loved ones. Choosing one with too many features, on the other hand, might not be practical and would only add to the overall cost of the premium.
Here at Rate Detective, our qualified advisors are ready to help you choose the right life insurance policy for your needs. They will look into your personal circumstances and provide you with rate comparisons of Australia's most trusted insurance companies. After all, you deserve to get the right coverage for your needs. Contact us today for more details!