Life Insurance?

[Sicilianmama]

So this really has nothing to do with camper trailers, but I was hoping to get people thoughts on Life Insurance.
When we had the kids we straight away signed up my hubby for life insurance, however at the time it didn't even occur to us that maybe I should get it too. Anyway last night, in the middle of the night, for some strange reason I woke up and all I could think of is how stupid of us to not get life insurance for me! I mean I'm the one who looks after the kids, I would hate it if something happened to me and hubby had no income so would be forced to continue working and to have to put the kids into daycare. Not that there is anything wrong with daycare but they have never been so it would be a big shock for them.
I think it would be harder for hubby to cope without me, than me cope without him, as at the end of the day, I'm the main carer for the kids, sure he's an awesome hands on dad that does a lot more than most dads out there when he is home from work but at the end of the day it would be a huge adjustment for him to have the kids all day everyday.
So how many of you have life insurance and are both parents insured?  How much would you insure the mother for? I would like to think hubby could stay home with kids till they are at school and even then only go back to work during school hours.

I hope you guys don't mind me asking the myswaggers this as it is really not CT related

[Mace]

IMO the minimum life insurance you both should have  is a policy linked to your home mortgage, so if either of you is deceased, your home loan in paid out.  Many would have this as some lenders insist on it.

We also both have small life/income protection insurance policies provided within our supperannuation schemes wich would pay out say $80k to $100k if either of us was deceased.  This is probably not enough for someone with a young family, but enough for us as the kids are independant (sort of).

Id recommend that your life insurances cover your outstanding liabilities at a minimum.

 

[Beachman]

With a couple of young kids it’s not unreasonable to cover yourself for $1M. While that sounds a lot, add up what your mortgage plus other debits are, then work out the cost of day-care or a nanny until the kids reach 18.

Odds are if something does happen to the Mother, the Father may work loss hours helping with the kids which means a pay cut or he may not take a promotion due to the commitment he has at home. 

I also recommend using any of the major Insurance companies via a Financial Advisor and not using the insurance offered in the TV ad’s where acceptance is guaranteed and it’s all done over the phone.

[LJs GU]

Sicilianmama,

Straight up, I'll tell you I'm an adviser so I can help with advice. More than happy to take a phone call (based in Mt Waverley in Melbourne)... no cost, no obligation... just giving back to the Myswag community!  PM me if you like.  Same goes for everyone else.

Generally, 9 times out of 10, having life cover is usually better through a super fund.  Better because:
1. You don't need to pay the premiums directly every month from your cash flow, it comes from your super balance.  As long as there's money in it, it won't lapse.
You can top your super up to pay for it if you're worried about it eating into your balance.  Is self employed those super contributions are tax deductible.  If you're an employee, you can salary sacrifice it.  Both better from a tax point of view.  You may even be eligible for a gov't co-contriubution.
2. The premiums are generally cheaper on a dollar for dollar basis.

You also need to know about the other three covers:
TPD.  Cover if you're Totally and Permanently disabled. (Also available through super)
Income Protection. Cover is you can't work, either totally, partially, permanently or temporary. (Also available through super)
Trauma.  Cover is you suffer certain medical events. Cancer, heart attack, stroke, MS, Parkinson's, MND, Chronic liver and kidney failure.  About 30 or so "big one's"

I can't stress enough that you should go talk to an adviser, as there's so much more to it.  While the best intentions are made by friends and the like, you need to get it done right and in a way that suits you, not someone else.

Find an adviser that will explain what your options are, the best way to own these covers and help you determine what (if any) and how much you want... not what will give them the best commission!!!!!

LJ

[D4D]

Find an adviser that will explain what your options are, the best way to own these covers and help you determine what (if any) and how much you want... not what will give them the best commission!!!!!

Does such an advisor exist

[cancan]

Find an adviser that will explain what your options are, the best way to own these covers and help you determine what (if any) and how much you want... not what will give them the best commission!!!!!

Of course the issue is how do you know if the advisor is giving you the best advise for you or for there commission

[BigJules]

Does such an advisor exist

Sounds like there is one in Waverely. 

This is a good discussion. I know this is a subject that worries me. I had life insurance but then changed super funds and the new fund wanted all sorts of info that was bno longer readily available to me or them.

[LJs GU]

Does such an advisor exist

Beautifully served up on a platter for me to answer....

Of course the issue is how do you know if the advisor is giving you the best advise for you or for there commission

Go get a second/third/fourth opinion. 
You should be able to go see an adviser and get to the stage of them giving you an idea of your best option (not specific written advice) for you without any cost or obligation... then go compare them.  I often give 'cold callers' my opinion (good or bad) on other advisers advice.

When it comes to insurance, there are some advisers out there that wont mention super ownership as that 'structure' may not pay them any upfront commission. 

It is a bit of a mine field, but ultimately you have to go with an adviser you can trust and feel comfortable with.
LJ

[LJs GU]

This is a good discussion. I know this is a subject that worries me. I had life insurance but then changed super funds and the new fund wanted all sorts of info that was bno longer readily available to me or them.

Good point BigJules...  One of the 'mines' in the mine field I spoke about.

[Jasman]

Hey SicilianMama, the first thing you need to do is work out what you would want your families life to look like if something was to happen to either of you, for instance if you died would hubby want to give up work and look after the kids full time or would he want to hire a nanny etc.  Once you work that out you can work out what type of cover and how much cover you need and decide whether or not the piece of mind is worth the cost but I think about it like this, more than likely you wouldn't drive a $50,000 car around without having it insured so why would you not insure your life and ability to earn an income/provide care which is a lot more valuable than any car

I think you should talk to a financial planner, I know there has been a few observations made above about their value but here's a few tips/comments.

- most planner are honest people but it's best to seek out a referral from friends etc and take advantage of the free appointment most planners offer to see if they fit you - it wouldn't hurt to interview a couple, remember you are employing them!

- if the planner tells you what you need without taking the time to understand your circumstances then find another one.

- Make sure the planner has access to a number of different insurers, the easiest way to find this out is just ask. I'd be worried if they only have acces to one or two.

- Most insurers pay commissions. The bulk of planners accept this as payment or at least partial payment for advice.  Ask the planner upfront how they get paid and what the costs would be especially if you don't use a product that pays them a commission (ie the cover inside many employer super funds), if they say that's not an option try another one.

- if you sought advice when you set up your husbands cover and they didn't suggest you may need some cover probably avoid them also.

Sorry I haven't given you a definitive answer but hopefully it helps you.

[GU_Thomo]

Just remember that insurance is to protect an asset so be very callous when deciding who to insure and how to insure them.
For example and not meaning to offend, kids are liabilities, they cost you money, so do not get sucked into insuring them as you are financially better off should the worst happen.
Consider Death and disability insurance for Mum and Dad, particularly if you are both working.
Also be aware of the different types of Life insurance and ignore endowment policies, they are just expensive savings accounts.

http://www.ratedetective.com.au/guides/types-life-insurance.htm

I included this link fo no other reason than it gives an explanation of the different types of life insurance, I know nothing about the company.

Remember educate yourself and buy, don't get sold.

Cheers
Parry

[Signature035]

Good advice Parry,

I have been giving this alot of thought over the past months.  We have had life policies for myself and the wife for the past 25 years or so....
As I am nearing retirement...   (depends who you talk to).....   and at an age when it is more likely that it may be needed,the monthly premiums are getting to a level that is uneconomical,but with morgages and a couple of kids still dependant I am hesitant to stop paying after the length of time I have held the policy.... and whay are the wife's premiums 1/4 mine?  I might look further into this Superannuation thing.

[Jasman]

For example and not meaning to offend, kids are liabilities, they cost you money, so do not get sucked into insuring them as you are financially better off should the worst happen.
Consider Death and disability insurance for Mum and Dad, particularly if you are both working.
Also be aware of the different types of Life insurance and ignore endowment policies, they are just expensive savings accounts.

I'm not sure I agree because I don't know of one parent who wouldn't sell everything they have to help their sick child, any illness that hangs around a while costs a lot both financially and emotionally so in my opinion cover for kids is definetly worth considering. Especially considering it's so cheap to get pretty good cover for kids.

You don't have to worry about endowment insurance anymore, I can't think of one insurer who still offers this type of cover.  Some people still have it, they just can't get a new policy.

It's really hard to educate yourself 100% on insurance as like everything the devil is in the detail, especially in bad contracts where they provide themselves wiggle room to get out of claims.  I still think your best bet is to get advice from someone who knows their stuff.

[LJs GU]

why are the wife's premiums 1/4 mine?

Like any insurance, premium rates are based around statistical probability for a person at that age. The more likely you are to suffer an 'incident/event' the more you'll pay (and vice versa).  Premiums can also be varied (read increased) on an individual basis due to personal health.  Sometimes exclusions can be applied for existing illnesses or family history.

Remember insurance is offered by a share holding company that's there to make a profit.  It's not a community service, and the insurer is guided by their re-insurer.

LJ

PS Signature035, definitely look into the super ownership.  Check your super fund, as you may have an adviser 'attached' to it.  If so call them and make them earn their money.

[Mallory Black]

GU-Thommo you are so wrong with your view about life insurnace especially kids
I'll say no more to you about it....that's how it goes

I work in the financial planning industry too (IResearch on Super funds mostly) and let me tell you, having an insurance package that is affordabe AND still capable of delivering in the event of a claim is an absolute must.

My story.. I was doing face to face advice but it was a real grind, I prefered what I do now so took a step back.
The last client I ever did business with in 2010... took me 3 months to pin down to be able to write advice, took another 3 to get the cover approved (getting the doctors reports etc, was also over xmas) in the end cover was approved with no loadings or exclusions, her policy had been active for 6 weeks and boom, dead in a plane crash.
The policy was protecting a $750k mortgage against a $2million property which was duly handed to the beneficiaries (adult children) debt free. 14 days from notification to payout.

Sicillianmama, here's the basics

A good adviser- This is the person who will listen to your situation, needs and goals and can actually formulate a protection plan based on what you need to protect and what your future goals are.
Don't get led by what I call "engineered conversations" that seem to put words into your mouth and come up with round numbers like same amount of cover between husband and wife for instance.(very very rare) We're all different.

A good adviser-  will go to some detail to learn your situation and while it might seem a bit uncomfortable spilling personal details to a person you just met, but that's how a good adviser will get to the heart of what's best for for you.

A good Adviser has access to Insurance Products that are in the top notch bracket and can back themselves if there's a problem.
A good insurance product will have the flexibility to be able to be changed as your needs change and offer benefit upgrades whenever the product is revised

Try as much as possible to cover yourself for the range, Death, TPD and Trauma, Income Protection if you are working.

Insure your kids -Child Trauma - even if it's just to cover your own wage for a year or two to be able to care for them. cheaper than pet insurance in most cases!

Underwriting - the best life insurance firms always do their approvals..... up front ...... Before you get covered.
Two Big Things about up front underwriting..
1- you will know 100% what you are covered for and what you are not covered for
2- if there is a claim (knock on wood) you get paid faster. those TV ad insurers fail to tell you that while there's no medical checks at sign-up, guess what, they underwrite at claim time... the worst time.

Anyone who doesn't think they need insurance..Go to any large hospital and strike up a conversation with some patients in there under 50 and learn what hardship is.

[Sicilianmama]

Thank you for all your advice, it is something that has been playing on my mind for a while now and you guys have brought up some really good points. Thank you!

[Topender]

Another thing that people need to make sure they have is a legal Will.  Having lost a Brother in law (my Wifes Sisters Husband) and having to deal with the legalities involved with not having a current Will, everyone should have one.  He had great insurance both life and some form of work place insurance also paid out as it was on the road home.  The issue was not having a current Will. Who was the money going to be paid to and how was it to be divided?  Having a Wife and two Little kids left behind the amount is required to be split three ways evenly and the kids $'s are then put into trust until they are 18 etc. hundreds of thousands each.  Basically a big hassle and a whole lot of money that could be used by the now single mother to raise these two poor children is now locked away in trust funds until they are old enough to legally access it although at the age of 18 they will probably not use it wisely.  My Wifes Sister would probably have put it away anyway for them, but in this situation without a Will, she had no say in it. My wife and myself have been through the process of updating everything including the Life Insurance and Wills after being involved in the whole process.

Dave

[Tassie devils]

Both myself and wife are fully insured we also have income protection,but like topender said just as important to have a will.
Note to self must get a Will!!

[LJs GU]

...and don't forget about Enduring Powers of Attorneys (financial and medical). Equally as important as wills.
LJ

[Tjupurula]

Hi Sicilianmama
Try to get life insurance through any company when you have diabetes.  My good ness it is like I said plague, they straight put the quote up by nearly 70%, thank goodness I didn't mention that I was over 50, that may have hurt.
Tjupurula

[Sicilianmama]

Yes that is another thing we need to do is get a will 

[rescue1]

Just try to get insurance you can claim on in my line of work....

[cancan]

Just try to get insurance you can claim on in my line of work....

So are you saying that if we need you to rescue us pray that we have life insurance

[Garfish]

We were in a similar boat,  but then we did the Maths with 3 kids in before and after school care, vacation care etc,   it was a no brainier, in addition if we needed this policy which I hope is not the case, i would need to look at changing jobs and potential drop in income. u. My opinion  Do it but find a good advisoor if you haven't already

[Mallory Black]

PS Tjupurula, any health condition related to blood is tough to cover because it's blood that goes through your whole body and organs so everything is affected.
Do your best to manage what you know about your health, cover what you don't know or what might happen to you in the future is the approach to take.
cheers all