Money

Why you need life insurance

Noel Whittaker
Noel Whittaker

WE all know that accident or illness can strike suddenly, and without respect for age or assets.

This leads to the vexed topic of life insurance, a subject to which most of us have a rather illogical reaction. We don't want to know about it; we avoid it, and yet when tragedy strikes we almost always wish we had taken out more.

So who needs it, and how much is appropriate? The first question is simply answered by asking; "what would happen if the breadwinner died, or was unable to work due to a serious accident or illness?" Obviously if you are single and living at home, or you have relatively small debts and a partner with a good income,  you probably have no need for life cover. But, if you have a large mortgage and dependants, you should be asking just how much is enough.

Think about a couple in their mid 30's, with children aged 14,10 and 8.  He earns $65,000 a year, and she earns $10,000 from casual work. Their debts total $200,000.

If he was killed, or became totally and permanently disabled, the family would need at least $1,300,000. This comprises $200,000 to pay off their debts, $1,000,000 to give the family an income to replace what he used to earn, and $100,000 to establish a fund for the children's education.

What is the most tax effective way to take out life insurance? Through superannuation - if the premiums are paid using salary sacrifice they are effectively tax deductible and for most people the benefits on death are tax-free. Also, by taking out insurance through your superannuation fund you can enjoy cheaper premiums as the large superannuation fund managers buy insurance wholesale and pass the savings on. As always, seek expert advice.

Noel Whittaker is a co-founder of Whittaker Macnaught Pty Ltd.  His advice is general in nature and readers should seek their own professional advice before making any financial decisions.  His email is noelwhit@gmail.com

Topics:  insurance, life insurance, noel whittaker




Opinion: To SRV or not to SRV

Craig Howe.

One option for making ends meet

Acquittal on five DV-related charges

Grafton CourthousePhoto Adam Hourigan / The Daily Examiner

Jury finds defendent not guilty after three day trial

Strange Politics: Roald’s darling makes for an ale tale fail

Pauline Hanson demonstrates how to use a squat toilet at Tanby Point, Emu Park.

'Just consider these wonderful lines from the book'

Latest deals and offers

Rachel Weisz understands celebrity gossip fascination

Actor Rachel Weisz

Weisz says mystery is good for an actor

Gina Rodriguez relished dramatic change for new film

Jane the Virgin lead Gina Rodriguez

TV star shaved her hair for movie role

Branson "amazed" he's still alive after cycling crash

Branson saw "his life flash before my eyes" during a bike crash

John Krasinski has better sex now he's in good shape

John Krasinski says there's at least one good reason to get jacked

Kanye West gets 'free reign' at VMAs

Kanye West has been let off the leash for the VMAs

Robbie Williams sings at manager's funeral

Robbie Williams and Lamar sang at the funeral of their manager

REVEALED: Pat Rafter's $18m Coast house on the market

Check out the photos of the Coast's most expensive property for sale

The "correction we had to have" in Gladstone's rentals

UPWARD MARCH: The rental vacancy rate in Gladstone has improved for the first time in more than a year, providing a confidence boost in the market.

Vacancy rates improve with signs that things are getting betterF

ISLAND FOR SALE: Cheap Fraser Coast island drops price again

Suna Island in the Great Sandy Strait will be auctioned by Ray White Hervey Bay on Saturday morning.

This is the cheapest island you will find for sale in Australia

How a family home can fit on a 250sq m block

This is what you can build on 250m2.

Here's the floor plan of a home built on 250sq m

Investors eye Gladstone's $4m island with resort approval

UP FOR SALE: Turtle Island is on the market.

CHINESE and Sydney investors flag interest in Gladstone island.

Take a sneak peek at this $19m Whitsunday mansion

Mandalay House features a private helipad.

Mandalay is currently on the market with an asking price of $19m