Life Insurance

Life insurance is often the first type of cover people look at as part of a wider financial protection plan. Mortgage holders, sole or main income earners and families with dependents are the most common candidates locally. A death carries financial consequences well beyond grief: an outstanding home loan, ongoing living costs for a partner or children or income a household relied on. Self-employed people and tradies, common across Coffs Harbour’s local economy, often think about cover earlier than others, since there’s no employer default policy sitting behind them.

There’s no single formula for the right amount of life insurance. Cover is more commonly worked out by weighing several factors together, not applying a fixed calculation:

• Outstanding debts, including a mortgage or personal loans
• How many years of income a family would need replaced
• Ongoing living costs, from everyday expenses to school fees
• Existing savings, other insurance or superannuation death benefits that could offset what’s needed
• Whether cover should reduce over time, as debts are paid down, or stay level throughout

Working through these questions is a conversation, not a figure pulled from a calculator and it should always be weighed against your own financial situation and objectives.

Life insurance pays a lump sum to your beneficiaries if you die. Income protection instead pays an ongoing amount to you, generally up to around 70% of income, if you’re unable to work due to illness or injury while still alive. They cover different risks rather than overlapping, which is why many people hold both.

Many super funds bundle in some life insurance and TPD cover automatically, and a smaller number also offer income protection. Not every fund offers all three, and the amount and type of cover on offer varies from fund to fund. It’s common to hold cover through super without ever applying for it directly. A default level often starts as soon as an account is opened, and stays active from there.

Many Coffs Harbour locals already have some cover this way without realising it, since premiums are simply deducted from the fund balance rather than a bank account. A mortgage, a new business or a job change is often what actually prompts someone to check what’s included. Although you may have insurance through your superannuation fund, it still may be beneficial to review your cover because cover varies greatly from superannuation fund to superannuation fund.

Paying off a mortgage, having a child or a change in profession/income, can all shift how much cover makes sense and how it should be structured. A policy taken out several years ago may no longer reflect your current financial situation, which is why periodic reviews are worthwhile.