What is first to die insurance?
A first to die insurance is a term used by American life insurance companies. It's a joint life insurance cover that protects both yourself and your partner under a single policy.
Saving you the hassle of having to apply for two separate individual life insurance policies, a joint life insurance policy is a suitable alternative for parents and married couples. What’s more, some insurance companies offer a premium discount for joint life insurance policies, making a first to die life insurance policy your ideal cost effective option that will allow you to save quite a handsome amount in the long run.
With a first to die insurance policy, you will receive a lump sum or monthly income following the death of either policyholder, which allows the surviving partner to take care of the remaining financial obligations. After this payment is made, the joint life insurance cover will end.
First to die insurance is ideal for couples who are looking for a simple but effective life insurance policy as it will provide both partners with equal peace of mind for an affordable price. Instead of only insuring the main breadwinner of the household, both partners can be insured.
How much first to die insurance do I need?
Like everything else in life, moderation is key when choosing your own first to die insurance.
Skimp out and choose the cheapest cover, and you may find that you place your family in a tight situation with not enough money to cover your financial obligations. On the other hand, if you go to the other extreme and purchase the most expensive cover, you may find that you waste your hard-earned savings on unnecessary additional policy inclusions.
A great way to get a feel for how much protection you really need is to look at your current situation:
- Your income. Are you the main breadwinner of your household, or does your partner also work? Assessing how much you rely on your income will help you determine how much protection you need to upkeep your current lifestyle in the case that you cannot work any longer.
- Debts. Perhaps you have a mortgage or have some personal loans to pay off. In either case, it is a good idea to factor these in as you don’t want to leave your family burdened by your financial commitments.
- Your partner and children. Is your partner a stay-at-home parent with children who are still attending school? If your partner had to pick up a full-time job and become the main income earner of the family following your death, the costs of keeping the house and raising the children could quickly add up in the form of childcare costs or hiring a full-time nanny and housekeeper.
- Risk of injury or major illness. If you have a family history of serious medical conditions or your job relies on your physical abilities, maybe you’d like to choose a higher level of cover to protect against any risk of injury or major illnesses. You may also find it worthwhile to add on a Total and Permanent Disability Insurance premium, if possible.
It is important to take the time to carefully discuss all of your family’s needs with your partner to make sure that you will be able to reap the maximum benefits from your first to die insurance.Back to top
Who needs joint life insurance?
Given the nature of the insurance, a joint life insurance can be shared between two people who are a couple.
Perhaps you are a young couple who have just married, or maybe you are the proud parents of a newborn baby. In any case, it is a good idea to be proactive and look into the option of a joint life insurance early on while you are young and free of health issues. Applying early as possible before any health complications arise will likely give you more insurance options to choose from, with cheaper premium costs.
Most insurers will offer a joint life insurance option depending on which cover you choose. Look out for terms such as "joint life insurance", "companion life insurance", "couples insurance" or "first to die insurance".Back to top
Things to consider when choosing first to die insurance
When choosing first to die insurance, remember that it should be more than just a replacement of you and your partner’s salaries. When you take the time to value out everything that you and your partner do for the family such as looking after the children or running the family home, you will be surprised to find that you may need more cover than just your salary amount.
With that in mind, here are some other things to consider when choosing a first to die insurance:
- Policy features. Choosing your most suitable first to die life insurance should be more than just a quick comparison of the cheapest premiums. It is essential that you look at your family’s lifestyle and financial expenses so you can find a first to die life insurance that will match those needs. There are many resources on finder.com.au that will help you compare various insurers and weigh out their pros and cons.
- Exclusions. Perhaps you are an extreme sports lover or have a pre-existing medical condition. Whatever the case, it is extremely important that you are aware of all your policy’s exclusions so that you are covered for the lifestyle that you lead. There is no point in purchasing a joint life insurance policy if the insurer will reject your claims later on. Be sure to speak to an adviser and read the Product Disclosure Statement (PDS) in full before committing to purchase.
- Eligibility. Some policies will have eligibility requirements based on your age, current health or residential status. Generally, first to die insurances will be available to Australian residents who are between the ages of 17 and 69, with renewal options until a person reaches an older age.
- Renewals. Does your first to die insurance offer the option of renewals? Are there any requirements that you have to meet to be able to renew your first to die insurance policy, such as a minimum time period commitment?
- Children. Some first to die insurance policies will offer the option of adding on your child to your policy for added peace of mind. This may be a convenient way to protect your whole family. Consult your joint insurance adviser if you seek this option.
Apply for first to die insurance
No one expects to get sick, seriously injured or pass away suddenly, but the reality is that it can happen to any of us at any time. While the uncertainties of life shouldn’t slow us down, it’s best to be prepared for all situations with a first to die life insurance so that if something were to happen to yourself or your partner, the other can continue to adequately provide for your family.Back to top