The purpose of life insurance is to replace the economic contribution of the insured person to the household in the event of an unfortunate event. If it’s understood why we have life insurance then it’s easier to appreciate how much you should have and its value to you and your family.
Myth #1: I’m the sole breadwinner in the home so it’s only me that needs insurance.
If your non-working spouse dies or has a debilitating illness, then you could be faced with childcare, transport to and from school, shopping, cleaning, modifying the home for wheelchair and a myriad of other issues that you may have to ‘buy in’. So it’s worth insuring non-working spouses.
Myth #2: I don’t need any form of disability insurance because I can get ACC.
Yes that’s true if it’s an accident. But most lengthy periods off work are due to illnesses and not accidents. These include cancer, heart disease and stroke. What would be the financial impact on the household if you had to give up work for say a year?
Myth #3:I have a mortgage of $350,000 so that’s how much I should insure myself for.
So you die and your mortgage is cleared. That is clearly a huge help to the surviving family, however how do they survive financially now that your income has gone? Food, rates, car running and school costs don’t stop. It should be calculated correctly before you decide on an amount.
A lot to consider, which is where we can help.
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