When is the Right Time to Take Out Life Insurance?

The ‘right time’ to take out life insurance is different for everybody – there’s no one-size-fits-all approach. Life isn’t static either, so it’s likely that your life insurance needs may change regularly over your lifetime. This guide will focus on some typical life stage milestones that may provide good opportunities to consider your life insurance options (read about the different types in this guide, or to review your existing cover. That way you can ensure the cover you have is always right for your circumstances.

Evolving Needs Based on Lifetime Milestones

Single and ready to… be insured

Life insurance may not seem like a priority when you’re likely to have limited responsibilities due to having no dependants. But it’s still wise to think about how you would take care of yourself and cover your bills if something were to prevent you from being able to work. This is where Income Protection Insurance might be considered as it can help you sustain your lifestyle if you become sick or get injured. If you are diagnosed with a terminal illness, Life Insurance pays the lump sum to you, helping you maintain financial independence right until the end and removing additional financial stresses.

In the case of an untimely death, life insurance can help by paying a lump sum to your parents, siblings or others close to you so that they can help take care of any debts you might leave behind, as well as keep any of your assets within the family. One big advantage to taking out cover in your younger years is that you can generally get a higher level of cover and a lower premium than when you are older.

Building a Career or Growing a Business

Work is the foundation that allows us to construct a future that we see for ourselves, and which may include buying a home or travelling. That’s why it’s important to consider whether you could still afford to pay your bills and pave a road to that future if you were forced to take a career break due to an illness, sports injury or accident. People focusing on their career often consider taking out Total and Permanent Disability (TPD) Insurance, Income Protection Insurance or Critical Illness (Trauma) Insurance so that they don’t have to put all of their plans on hold if they can’t work.

If you’re self-employed and you’ve made substantial new investments in your business – for example, due to the purchase of a new building, inventory or equipment – you may want your insurance to cover any accumulated debts to help avoid your family being responsible for these in your absence.

Buying a Home

For most people, their home will be the most significant investment they ever make. So, it makes sense to reassess your Life Insurance and Income Protection cover when you buy a house, take on a new mortgage or increase an existing home loan. This helps ensure your loved ones have enough money to pay off debts in the event of your injury, illness or death. It can also allow them to maintain the home without having to deal with extra financial burdens, and ultimately, protect your investment.

Coupling Up or Starting a Family

Making a commitment to a life partner is often a trigger to start thinking seriously about Life Insurance. With a partner or spouse to share your life with, it’s important to safeguard both your short-term and long-term plans. Taking out Income Protection Insurance at this time can help secure your partnership financially against unforeseen events by providing regular monthly payments to help with bills and debt repayments in these circumstances. If one of you suffered a terminal illness or passed away, Life Insurance can make sure your partner won’t be left in financial strain by providing a lump-sum payout to cover any mortgages taken out together or other personal debts owed by either of you.

Couples that don’t have Life Insurance also risk their family’s financial security if they decide to start a family, or have a growing family that depends on them. With rent or a mortgage, school fees, childcare and everyday living expenses, you wouldn’t want your family to be left short financially if you were no longer around to support them. Different types of Life Insurance can give them options to continue enjoying the life you envisaged for them.

A New Chapter

Whatever life throws at you, taking out Life Insurance means you will still have options when you need them most, to protect your way of life. Losing a spouse, getting divorced, getting a promotion, remarrying or starting a new family can all be reasons to reassess your life insurance cover and beneficiaries. Life Insurance can also become more important to consider as you get older, as you may want to preserve all the hard work you’ve done over the years.

The Right Time is Now

It could make more sense to take out cover now, rather than waiting until your situation changes. Same goes for writing or updating your written Will.

Disclaimer: The content of this blog is intended to provide a general guide to the subject matter. This blog should not be relied upon as legal, financial, accounting or tax advice.