Life Insurance

Why Life Insurance Cover Needs To Change As You Grow

BY REI SUPER

Sometimes we don’t think about our life insurance needs until it’s too late. Changing circumstances, rises or falls in income and whether or not the kids are still at home all affect the amount of coverage we need.

JUST STARTING OUT : KICKING OFF A CAREER AND SAVING MONEY FOR YOUR LIFE GOALS

So you’ve left school, completed a trade or a degree and started out in your progression. You might not be thinking about life insurance at this stage of your life, but ensuring you have the right cover is something you definitely need to consider.

As you’re starting out, you might be thinking more about saving for a home, getting some holiday savings under your belt and enjoying life. But basic life insurance cover will see you on the way to preparing for financial wellness for the rest of your life.

When you’re starting out with life insurance, you need to think about the amount of premiums you might want to pay. Stepped premiums can be more popular for young people, as they start out low and increase year on year. But you will need to think ahead and make sure you can cater for those rising premiums as you get older. The last thing you want is to pay for a policy for 10 or 15 years, then have to cancel it and end up needing a benefit you don’t have in place.

Level premiums can change over time but the increase isn’t affected by one’s age as stepped premiums are, but the upfront cost is higher and are often much more expensive than the stepped equivalent when you first take out cover. Level premiums may increase, but you pay a more consistent amount year on year.

Summary: A basic life insurance cover will see you on the way to preparing for the rest of your life. However, this is a good time to think ahead and make sure you can cater for growing needs as you grow older.

THE PRIME YEARS : BUYING A HOUSE, MOVING IN WITH YOUR PARTNER OR HAVING CHILDREN

You’ve got a home (and probably a mortgage), as well as kids and all the costs that come with them, including school and medical fees. When you consider your coverage at this stage of your life, it’s likely that the bare minimum you will aim to cover is the debt on your primary residence. The last thing you want is to leave your family without a roof over their heads.

But you should consider other outgoings – school fees, car payments and so on. And if you’re the primary wage earner and your partner is the primary carer, you may want enough coverage so the children can be looked after until they’re old enough to fend for themselves.

DISCLAIMER

Future investment performance can vary from past performance, and you should not base your decision to invest in REI Super simply on past performance. Past earning rates are not an indicator of future earning rates. The investment returns of REI Super are not guaranteed, and the value of the investment may rise or fall.

This article was brought to you by Industry Super Australia.

The information contained in this article does not constitute financial product advice. REI Super does not give any warranty to the accuracy, completeness or currency of the information provided. Although REI Super makes every reasonable effort to maintain current and accurate information, you should be aware that there is still the possibility of inadvertent errors and technical inaccuracies. REI Superannuation Fund Pty Ltd ABN 68 056 044 770, AFSL 240569, RSE L0000314 Trustee of REI Super (ABN 76 641 658 449), SPIN REI0001AU, RSE R1000412. MySuper unique identifier 76641658449129. May 2022.