Death cover provides security in times of uncertainty
One of the best ways to secure your family’s future is by obtaining a death cover insurance policy. It is a traditional life insurance policy that backs up your ability in meeting your family's financial obligations in case you pass away unexpectedly. Death cover is commonly known as life cover in the Australian market.
What are the key features of life cover?
- Lump sum payment. Death Cover provides a lump sum payment if the policyholder is to pass away
- Additional benefits. Additional benefits may be provided to cover funeral and financial planning expense
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What are the features and benefits of death cover?
Life is full of uncertainties and you want to have the peace of mind that your family is able to maintain the quality of life they live today and in the future. When you pass away or have been diagnosed with a terminal illness, it can have a devastating effect to your family. Not only that they have to deal with the grief of losing you, but they also need to figure out how they can keep up with the bills and expenses that will still need to be paid.
This is where a death cover policy can help, by providing them with a lump sum payment benefit to minimise the financial burden, allowing them with a smoother transition to a life where you are no longer around to care for them.
What type of expenses am I covered for?
- Rent or mortgage repayments
- Children’s education expenses
- Daily living expenses and needs, such as food and clothing
- Costs to hire housekeeper or nanny
- Home maintenance costs
- Funeral expenses
- Legal expenses
- Estate settlement costs
How do I determine my life insurance needs?
It is difficult to set a standard insurance policy that would apply to all policy holders. There is not just one death cover that can be considered to be ideal to all, which is why it is important to assess and compare different policies to determine which plan would be most suitable to you and your family's needs. Deciding on the death cover amount to insure may not be such as a simple task, but the best way to calculate the right amount to match your needs, consider:
- You current annual income. Replacing your lost income for the years required
- Short-term and long-term debts. This often includes mortgage, credit card debts, personal loan, and car loan
- Your immediate expenses. This includes food, clothing and shelter (rent payments, if you don't own your home)
- Your children's education expenses. Consider the number of children you have and their respective ages to determine the total amount of expenses
- Emergency funds. Work out how much of your expenses such as a funeral arrangement, medical treatments, legal fees and estate settlement costs can be covered by your savings.
You can use a life cover calculator to give you an indication on how much you may need for a death cover. If you require further assistance, an experienced death cover agent can help you in determining an ideal amount that will match your needs situation, as well as providing tailored advice on life policies that suit what you require.
Forms of Death Cover Available for You
Life insurance provider typically offer three forms of death cover products which are whole life insurance, term life insurance and funeral cover. If you need to obtain financial security to pay for your funeral costs and you are not eligible to obtain term life insurance (due to specific medical condition or age), a funeral plan is a good option. This form of death cover insurance pays for all funeral expenses, which often includes:
- The mortuary facilities
- Coffin or casket
- Burial or cremation costs
- Flowers and wreaths
- Grave equipments
- Obituary notice in newspapers
- Official documentations needed to register death
Whole life insurance and term life insurance share similar features which include payment of the death benefit in form of a lump sum to the policyholder’s financial dependents. Unfortunately, whole life policy is no longer available in Australia; however, you can still obtain term life insurance and it is a popular type of protective insurance, due to its affordability and flexibility in choosing a term of coverage that suits you. Obtaining a funeral plan will give you short-term solution to subsidise the expenses incurred from funeral arrangements, while a life insurance policy provides a long-term solution for your dependants' financial needs in case of eventualities.
Death cover for different life stages
Single people
You have finished your education and have left home to start your own way in life. You will be most fortunate if you can get through this stage of your life without taking on debt. There might be that new car you are paying off, for instance. At this stage of life, you should start thinking seriously about term life insurance. Since you are young and relatively healthy, the premiums you pay will be reasonably low and you can adjust the amount of coverage as your responsibilities increase. Having the additional benefit of disability cover to your death insurance can give you an extra layer of protection should you become disabled as a result of an accident or illness.
Married couples with children
When you are married with children, you have taken on additional responsibilities, in which you have others who are financially dependent on you. It's a possibility at this life stage that you have a mortgage, or if not, you are likely to do so in the near future. If you pass away unexpectedly or become disabled through injury or illness, your dependents will be at risk of financial hardship, if you have no appropriate protection in place. With term life insurance, your family can continue the lifestyle they have become accustomed to and alleviate the stress of having to meet the ongoing financial obligations, when you as the main provider, is no longer around.
What is funeral cover?
Funeral cover is a simple insurance product that can provide many benefits and you have the flexibility to choose the amount you want to insure yourself for. If you are in the older age group and have little debt all, you may want to consider a funeral plan that will take care of your funeral costs, which can be quite considerable in this day and age. Funeral costs are the type of expenses that you wouldn't want to burden your loved ones with and with a funeral plan in place, your family can be rest-assured that they can afford the arrangement that you would've wanted.
