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

Topics:  insurance life insurance noel whittaker

WATCH: Junior Queen gets silver screen royal treatment

2008 Junior Jacaranda Queen candidates Elora Vest, Rachael Houlahan and Melista King are just a few of the girls who came together to share their stories and be a part of  the new documentary Jaca Girls.

A right royal look at the Junior Jacaranda Queen competition

YOU DECIDE: Should this be our Cover Image this week?

This picture of a shoe from James Spartacus had the most likes for The Daily Examiner's Cover Image photo this week.

Picture of shoe receives most likes for Cover Image

OPINION: Bees kill more than sharks

Bees are up there for killing machines, says editor David Kirkpatrick

Should we have nets for bees?

Local Partners

WATCH: Junior Queen gets silver screen royal treatment

NEW documentary explores the festival's 20-year-old quest as former candidates share their stories and experiences.

Tea party with the 'Queen'

TRADITION: 1955 Jacaranda Queen Stella Wilson sits with reigning 2015 Jacaranda Queen Charlotte White at last year's Jacaranda Afternoon Tea.

Meet the royal patyu in style

Making steps for 'Blacky' in Walk 4 Brain Cancer

Grafton locals are doing a Walk 4 Brain Cancer in Sydney for Robert Black.

Team Blacky aims to better $5000 to battle brain cancer.

Sound of Music star to compere An Afternoon at the Proms

This photo provided by Twentieth Century Fox Home Entertainment shows, from left, Chairmian Carr, as Liesl, Nicholas Hammond, as Friedrich, Heather Menzies, as Louisa, Duane Chase, as Kurt, Angela Cartwright, as Brigitta, Debbie Turner, as Marta, Kym Karath, as Gretl, and Christopher Plummer, as Captain Von Trapp, in a scene from the film, \"The Sound of Music.\" The 1965 Oscar-winning film adaptation of the Rodgers & Hammerstein musical \"The Sound of Music\" is celebrating its 50th birthday in 2015. To honor the milestone, 20th Century Fox is releasing a five-disc Blu-ray/DVD/Digital HD collector's edition, the soundtrack is being re-released, the film will be screened at the TCM Classic Film Festival in Hollywood later this month and to over 500 movie theaters in April. (AP Photo/Twentieth Century Fox Home Entertainment)

Saraton's rich history of stage and screen honoured in musical tribu

Bindi Irwin named in MAXIM HOT 100 list

Wildlife Warrior named among Australia's most beautiful women

Britney Spears suffers wardrobe malfunction

Britney Spears suffered a wardrobe malfunction during performance

'You Spin Me Round' hitmaker dies aged 57

Pete Burns

Pete Burns has died aged 57

REVIEW: Season 7 premiere of The Walking Dead disgusted me

I'm disgusted by The Walking Dead premiere.

SPOILERS: The Walking Dead premiere disgusted me.

Flick teases intense and entertaining Survivor grand final

Felicity 'Flick' Eggington in a scene from the TV series Australian Survivor.

GOLD Coaster's elimination leaves Lee, El and Kristie in final three

Priscilla concerned people will forget about Elvis

Priscilla Presley source Bang

She says she feels responsible to keep his legacy going

Look at me! Kath and Kim home up for sale

Kath and Kim from the iconic Aussie TV series.

'Crack open the Baileys and grab a box of BBQ Shapes'

Hinterland horse stud passed in for $8.25 million

UNREAL: This Maleny estate is incredible.

12-bedroom hinterland horse stud still available

Hit songwriter's Noosa mansion on market

SPECIAL PLACE: The Cintamani estate is going to tender, marketed by Tom Offermann Real Estate.

Is this Queensland's best property?

Kiwi siblings snap up Dotcom mansion for $32.5m

The new toy company owners of the Coatesville mansion want replace any controversy with positivity and fun. Photo / Barfoot and Thompson

The trio paid $32.5 million for the property in June

New $200 million development will create 580 jobs

Cassie And Josh with baby Alfie and daughter Andee. They have bought at new Lennox Head development Epiq.

Majority of new positions will be given to Northern Rivers locals

Cherrabah's mega resort plans axed

PLANS for a massive development at Cherrabah have been scrapped.