Life insurance protects your loved ones when you die by providing them with a payment. There are several types of life insurance policies. While they’re primarily used to protect your loved ones, life insurance policies are also utilized as versatile financial tools, including investment vehicles and as collateral for loans. Life insurance is complex—it’s best to talk to a broker to understand which policies are best suited for your needs.
Determining the amount of life insurance coverage you’ll need is complex, and there are various methods available. You’ll want to calculate how much money your loved ones will need if your salary is no longer available to them; additionally, you’ll want to ensure that you have enough money for things like university tuition for your children.
There are many ways to calculate the coverage you’ll need, including:
Realistically, you’ll need more than simple calculations to determine how much life insurance you’ll need—you want to factor in your investments, all of your costs, inflation, and other factors. Our brokers can help you calculate how much life insurance you may need.
Different life insurance policies will offer different underwriting procedures; some life insurance companies will require a medical exam, and some won’t. Your age may be a factor in whether or not your life insurance company requests a medical exam. The life insurance policy you choose may be another factor.
Your coverage through your employer may not be sufficient; it’s important to review your policy and calculate whether or not your life insurance benefits are going to be enough to cover your family’s expenses if you die. Often, you’ll want to top-up the coverage offered through your employer. The life insurance brokers at R.A. Hughes can help you determine whether or not you need additional coverage.
Critical illness insurance protects you if you develop a serious illness, like cancer or have a heart attack. The benefits from critical illness insurance are sometimes called “living benefits” as the policy pays out when you suffer the illness and live.
Life insurance, on the other hand, offers a “death benefit”—it pays out to your beneficiary or beneficiaries when you die. Critical illness insurance is designed to help you with medical expenses and lost income—life insurance is designed to protect your family.
For these reasons, it’s important to buy both critical illness insurance to protect yourself and your loved ones and life insurance to protect your loved ones. Life insurance will not pay out if you get a critical illness and live but cannot work.
