Most people who approach the issue of life insurance do so with a minimum of knowledge of how to employ the system for their best use. It seems fairly obvious – you get a policy for the amount of money you can afford or think you need and pay your monthly premium. Many people who take out policies don’t realize that in fact, you can choose the term for which you purchase the policy, and even those that know this often don’t recognize that it may be more beneficial to purchase a short term policy rather than a long term policy.
Young With a Family
This is the critical time for someone to have a full-fledged life insurance policy. If you are supporting a number of dependents, having a plan in place to meet their needs in the event of your demise is crucial; this is the very essence of the purpose of life insurance. Although needs between families may vary, this is when it’s most important to have a large enough policy to care for your family for a long time while they try to make longer term arrangements. If you have large investments, the sum of the policy you choose may be decreased, but in general, this is when you would get a large safety net.
Even though there is only term life insurance, and whole is not sold anymore in Australia, this can be somewhat misleading because many term policies in fact go to age ninety nine before they expire. That means you’ll be paying for a long time, in many cases until the same time you’d pay for a whole policy. If you pass the age of ninety nine, your policy disappears with nothing to show for it.
When you are just starting out, you may want to only purchase a policy that covers you while you will still be supporting your family. Perhaps after twenty of thirty years your dependents will not be so dependent, and paying for another thirty or forty years worth of insurance will only drain your income. You can easily find ten, twenty and thirty year policies that meet your needs now and are renewable after the policy expires.
Older With a Family
If most of your children are raised but still require help from you, or if your spouse is not working and you don’t have a large investment network, life insurance should still be a part of your plan, but perhaps not as strongly as when you were a young family starting out.
If your policy has expired, you may want to take out a new policy that costs less and provides less. You can compare life insurance plans and see that there is a broad range of available options, and you don’t have to continue with an expensive policy simply to maintain your insurance. By this time, if most of your dependents have some income, your responsibility to care for them is decreased, and their financial outlook should not be altered greatly in the event of your passing. The most appropriate life insurance policy is not the one with the biggest payout, but the one that matches your needs.
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