New baby? Time to reassess your life insurance needs   

So you’re the proud parent of a new baby – congratulations! But have you stopped to consider that now is the time to be thinking about your financial plan for the future? Ensure that you have adequate levels of life insurance in place. It’s not about tempting fate. Think of it as protecting your family’s (and your new baby’s) lifestyle. 

As a new parent, peace of mind will be a priority for you. So you need to know that if the worst were to happen to your family, you will still be financially secure.  Ask yourself what would happen if the main breadwinner in your family dies prematurely, or was sick or injured for a long period and was unable to work? Who would pay the mortgage, living expenses, car running costs and holidays? And looking towards the future, who would pay for your baby’s education?  While some Australians have an automatic level of life insurance cover within their superannuation, Rice Warner Actuaries estimates that life insurance cover within super is only 20% of what is needed on average[1]. The firm estimates that cover equal to 10 times (annual) earnings is recommended.  Know that the following types of cover are available: 

• Total and Permanent Disablement (TPD) insurance pays a lump sum as a result of disablement where you are unable to ever return to work. 
• Income protection insurance pays up to 75% of your pre-illness or injury salary if you become seriously ill or injured and are unable to work. Premiums are tax deductible. Increasingly this is offered as an option in superannuation but is not automatic. Policy wordings and benefit waiting periods vary so professional advice can help. 
• Trauma insurance pays a lump sum on diagnosis of a specific medical event. This can help with medical expenses, a home modification or a holiday following a medical event. It is not offered as part of superannuation.
• Life insurance pays a lump sum on death. 

Talk to your partner about increasing your family’s level of life insurance cover. This can be done through buying extra units of insurance in your super fund, buying a policy direct through a life insurance company or via a financial planner.  

To find out more about the risks you face and how you can take some simple steps now to protect your family’s financial future including a ‘how much is enough’ calculator, visit the Lifewise website today.

Remember that life insurance doesn’t need to be depressing or complicated. Once you’ve got your family covered, you can sit back and enjoy your new life together. 

[1] IFSA/Rice Walker Actuaries, Cost of Underinsurance, 2005