Q1.
A1.

Why have insurance?
We are not always prepared for what life throws us! If there are unforeseen circumstances happened to you, you will need to find a way to pay for damage and/or services. Without insurance, you would need to come up with these often large amounts of money yourself. If you do have insurance however, you pay an amount each year so that if an unfortunate event occurs that is covered by your insurance, your insurer will cover the costs as outlined in your policy.

Some insurance is compulsory by law, such as Compulsory Third Party (CTP) for a car or Public Liability Insurance for a business.

Q2.
A2.

What do you pay?
The premium is the amount you pay your insurer for insurance. It is the cost of your insurer providing cover for a 12 month period. Depending on the type of insurance you apply for, you may be able to pay it over 12 monthly installments rather than all at once. If you choose to Pay by the Month, you will be charged an administration fee.

The premium is determined on many different factors. You can always find this information detailed in the PDS.

As well as your premium, you also pay stamp duty, GST and any additional government charges and Fire Services Levy (FSL) if applicable.

What are your responsibilities?
It is your responsibility to keep your details updated and provide accurate information when you buy insurance.

You must also comply with your Duty of Disclosure when you apply for insurance and each time you renew or alter your cover. You must provide accurate and honest answers to any questions we may ask pertaining your cover.

What happens if I have a hard month financially and skip paying my life insurance premium?
Insurance companies usually allow a grace period of 30 days for such times. As long as you make your premium payment within that period, you’ll be covered. If you failed to make the payment in that time, what happens next is determined by the type of life insurance policy you have.

If your policy is for term life insurance, the policy lapses and ends after the grace period is over. You typically do not get any money back from all the premiums you have paid to that point.

When taking out a life insurance policy, it’s a good idea to consider taking any options or riders offered that will keep paying your premiums when you are too ill to work or become disabled.

How much life insurance do I need?
The general rule that most insurers suggest is to buy a policy that is seven to ten times the amount of your annual salary. However, to ensure your family is protected, here are a few things you need to consider:

• Current debts. Total up all of your debt. That is how much your life insurance will have to pay to eliminate debt as a source of stress on your family after you’re gone.
• Burial costs. The typical Australian funeral costs up to $7,000 and the price are increasing. You need to include at least the minimum amount when deciding how much insurance to buy.
• Cost of living. Being out of debt does not mean your family will have enough to survive on after your death. Consider the everyday living expenses: food, utilities, clothing, car repairs, etc. If you have children, you need to calculate how much it will cost to see them to the end of their schooling, until they are independent. All of this should be considered in order to make sure your family is going to be able to make their way in the world without you.