Marriage, kids and starting over: when to review your life insurance

Life isn’t static – it changes regularly, and so too do your life insurance needs. So whether you’re going through an exciting life stage, like getting married – or a more challenging one, like grieving a loss – it’s a good opportunity to review your situation. That way you can ensure the cover you have is always right for your circumstances.

Your evolving needs during different life stages

Young and single

At this stage of life, you may have limited responsibilities as you don't have any dependants. But you still need to take care of yourself and cover your bills should something happen and you’re not able to work. Income protection is generally an option you might consider for this life stage as it can help you sustain your lifestyle if you become sick or get injured and are unable to work.

Life Insurance is not as common at this life stage but there are advantages of buying life insurance early in life as you typically don’t have any serious health issues that can preclude you from getting cover later in life. You can also generally get a higher level of cover and a lower premium than when you are older.

Getting married

For many people, getting married is often the trigger to start thinking seriously about life insurance and income protection. Income Protection insurance can help protect you and your partner financially against unforeseen events by providing you with a regular monthly payment so you can keep up with bills and debt repayments if you were sick or injured and unable to work.

If one of you dies, life insurance can help provide the surviving partner with financial stability to maintain their current standard of living, including making mortgage payments or rent and paying any ongoing expenses.

Having children

As a parent, you’re always looking out for your children’s best interests. So when you start or grow your family, you might consider life insurance to protect your loved ones financially. Whether you earn the main income for your family or do unpaid work, for example as a stay-at-home parent, there are benefits to having life insurance. Life cover will pay a lump sum to you or your family if you were to pass away or become terminally ill.

Income protection is also a valuable way to help provide financial support to your family, particularly if the household’s primary earner is unable to work for an extended period of time due to injury or illness.

Buying a house

When you buy a house, take on a new mortgage or increase your existing home loan, you should reassess your life insurance and income protection cover. This helps ensure your partner and family have enough money to pay off the balance in the event of your injury, illness or death so they can then stay in the family home without having to deal with extra financial burdens.

Growing your business

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 outstanding business debts if you’re become sick or injured and unable to work.

Starting over

Losing a spouse, getting divorced, remarrying or starting a new family can all be reasons to reassess your life insurance cover and beneficiaries. During a life event such as this, it’s a good time to consider if you need to update how much you’re covered for to fit your new financial circumstances.

If you’ve separated or divorced, you may want to decrease the cover amount or remove an ex-partner as a beneficiary. However, if you have children that you want to support, you may need to maintain or increase cover.

Deciding what type of life insurance you need

There are different types of cover you can take out, including life cover and income protection. Each has its own set of benefits to protect you and your loved ones.

Life cover provides a lump sum payment to you or your beneficiaries if you become terminally ill or pass away. This typically includes a:

• death benefit that’s paid to your family or beneficiaries after you die, to help them maintain a comfortable lifestyle
• terminal illness benefit that’s paid directly to you if you’re diagnosed with a terminal illness and have less than 12 months to live, and
• cash advance payment that’s paid upfront to help cover immediate expenses while the insurer is processing the claim.

Income protection provides you with a regular payment to replace a portion of your income if you’re unable to work due to a serious illness or accident. It’s designed to help you take care of your living expenses so you can focus on your recovery. This includes:

• sickness and injury cover that pays a monthly benefit while you’re unable to work because of sickness or injury, or
• injury only cover that pays a monthly benefit while you’re unable to work solely due to injury.