Life Insurance is a type of financial protection that pays the policy owner in the event of the insured person’s death (which is why it is more accurately called Death Insurance). The profile of people who have a more obvious need for cover are those with financial dependents, particularly those with debts they would like to eliminate (or reduce) in the event of their death. Beyond any debt elimination, the question of helping loved ones fund future living costs and even education costs is a priority for many Australian adults.

So who doesn’t need life insurance? A simple answer would be that those without financial dependents may not require such cover – at least not for now. In spite of the common sense this seems to represent, there are some considerations which will see people take cover out before financial dependents come on the scene.

The first is for conservative-minded people who strongly believe they will need cover in the not-too-distant future. They could be planning to marry or start a family or even just remain hopeful of these outcomes. They might reason that failing to get cover beforehand will mean they are uninsurable at that time in the future when the need becomes more obvious (or if not uninsurable, the terms and pricing available to them then may be disadvantageous).

Another scenario when people might choose to bring forward their ‘need’ or at least desire for Life cover is when TPD or Trauma cover is a priority and where the cost of adding Life cover to these benefits is negligible or in some cases, negative (meaning it is actually cheaper to add Life cover due to packaging discounts which happens more commonly than you might expect).

Towards the other extreme are people who no longer need Life insurance as frankly, their financial dependents would be sufficiently supported in the event of their death due to existing assets. For such people, Life Insurance moves from a ‘have to have’ to a ‘nice to have’ and given the tendency for premiums to increase dramatically with age, it becomes something that eventually stops making financial sense for many people.

Our approach to advice is to determine our clients’ needs and priorities (in the context of their circumstances) before making recommendations for cover. Recommendations are always to be in accordance with our clients’ best interest and in some cases will call for more cover and in other cases will call for less cover.