Do I need life insurance?

Life insurance helps provide peace of mind at a number of different life stages, and can be suitable for all different lifestyles and situations. So, do you need it?

Life insurance isn’t about death – it’s all about love and helping to protect what you live for.

The short story is, having life insurance means your family can have help to continue to pay expenses, such as rent or a mortgage, as well as other bills and cost-of-living expenses, if you’re no longer here to provide for them.

But there’s a longer story to life insurance too, one that doesn’t only involve what would happen to your loved ones if you passed away. Getting to know more about those chapters of the story may help you answer the question, ‘do I need life insurance?’.  

What does life insurance actually cover?

The key feature of life insurance is Life Cover. Life Cover provides a lump sum payment if you pass away, meaning your family can cover costs associated with saying goodbye to a loved one, paying debts, and ongoing expenses such groceries and bills once you are no longer here.        

Most Life Cover policies also pay a benefit if you’re diagnosed with a terminal illness and not expected to live for more than 12 months,1 helping to cover costs at a very difficult time.

Plus, you can often add additional types of cover which can help protect you from other types of unexpected yet life-changing events, such as if you become Totally and Permanently Disabled2 or suffer a Critical Illness.3 Some policies, such as Medibank Life Insurance, even offer cover for your children in some of these circumstances.4

See below to learn more about the different types of life insurance or find the answers to a few common questions about how life insurance works. Understanding some key life insurance facts – and sorting them from common myths and misconceptions – may also help you decide whether life insurance is right for you.

When should you consider life insurance?

It can be important to consider life insurance when some of life’s major changes or milestones occur.

These may include:

  • Starting or growing a family. If you have a partner or children, life insurance can help cover their living costs and provide financial security if you pass away. Depending on the cover you choose, it can also help protect them – and you – if you suffer a Critical Illness, or become Totally and Permanently Disabled.
  • Buying a new home. Whether it’s your first home or your next one, life insurance can help cover the mortgage if something happens to you.
  • Starting a new job. Starting a new job is a good time to re-evaluate your changing needs and to consider whether you need life insurance or if you have the right amount.

Do you need life insurance if you have superannuation?

Superannuation funds can provide you with some level of cover for life insurance, depending on your fund, and what benefits you or your employer have agreed with the fund.

Most superfunds in Australia will automatically provide you with life cover. However, the level of protection that is provided by a superannuation fund may not fully meet your individual needs, as the fund or your employer chooses a level of cover that is applied to all fund members, or employees, regardless of their individual circumstances.  

There can also be some additional restrictions in relation to the cover provided by a superannuation fund. The definitions and terms under which benefits are paid can be more restrictive, limiting choice of cover. Legislation dictates that 'conditions' of release' also have to be met, meaning that in rare circumstances a benefit cannot be paid and must remain in the superannuation fund until retirement.

Insurance outside of superannuation can offer more choice, less restrictive terms, and remove the risk that the fund rules mean your benefit amount cannot be released. For insurance policies outside of superannuation, you’ll receive a benefit as long as you meet the policy terms and conditions.

If you want more information about the level of cover provided through your superannuation fund, you should speak to the fund provider or a financial adviser.

Ready to get or talk about life insurance? Have a look at the Medibank Life Insurance PDS. You can also get a quick quote online or call the Medibank team on 1300 152 271 if you’d like to talk to us.

 

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Things you should know

1 For the definition of terminal illness, please refer to the PDS.

2 For details on the optional TPD Cover, including definitions and eligibility criteria, please refer to the PDS.

3 For details on the optional Critical Illness Cover, including definitions, qualifying periods, and eligibility criteria, please refer to the PDS.

4 For details on the optional Child Cover, including definitions, qualifying periods, and eligibility criteria, please refer to the PDS.

Life Insurance

Medibank Life Insurance and Medibank Income Protection (collectively Medibank life insurance) are issued by the insurer, Zurich Australia Limited ABN 92 000 010 195 AFSL 232510 (Zurich). NEOS Direct, a registered business name of NDLI Pty Ltd ABN 70 665 747 277 AFSL 547119, distributes and services Medibank life insurance, which is promoted by NEOS Direct's authorised representative Medibank Private Limited ABN 47 080 890 259 (AR No. 286089) (Medibank).  

Any advice provided is general only and doesn’t consider your objectives, financial situation or needs. You should consider these factors, the appropriateness of the advice, and carefully read the relevant Product Disclosure Statement (which sets out the product terms, conditions and exclusions), Target Market Determination and Financial Services Guide before making a decision to acquire, or continue to hold, the product.

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