When should you consider taking out life insurance?

In NobleOak’s recent Life Insurance Pulse Report* conducted with over 1,000 Australians, our respondents told us that the main life events leading to them taking out life insurance were having a baby, taking out a mortgage, buying a home or getting married.

Amongst young families with life insurance, more than half said that having a baby had prompted taking out life insurance. For others, the top reason is taking out a mortgage or buying a home.

Interestingly, those who had a pessimistic outlook were more likely to be prompted to take out cover from negative life events such as someone close to then passing away, serious illness and having an accident, whereas those who had a more optimistic view were more likely to be prompted by positive life moments, such as buying a home or getting a new job, a pay rise or promotion.

Below is an overview of when and why life insurance may be important:

Starting your first job

If you are young and starting out in life, you may not think you need life insurance. But consider if you have entered the work force and had to stop work due to an unexpected illness or injury, how would you cope financially? The loss of your income for a protracted period of time could be difficult to deal with.

Income protection insurance can provide you with a source of income if you are unable to work due to serious illness or injury, and the regular income provided can be used to help pay for essential living expenses such as paying for someone to care for you, food and rent.

Getting married or in a serious relationship

Getting married or deciding to move in together is a great life development. But when you marry or enter a relationship, you may also be taking on shared financial obligations.

Moneysmart offers some great advice on the main financial things you may want to consider if you are getting married or living as a couple, including life insurance, and getting your will and superannuation in order.

Life insurance is a great way to help provide peace of mind if you or your partner became sick or injured, so that you don’t have to rely solely on your savings or credit to manage.

Later in life, if the unlikely event of a divorce was to occur, you may be left with a depleted income. Life insurance is an effective way to help protect your dependents against an uncertain future in the event of your death.

Taking out a mortgage

Taking out a mortgage is generally a big financial commitment for anyone. When buying a house, accessing your first home loan or increasing your mortgage, it’s important to think about financial protection.

Who will pay the mortgage if something happens to you or your partner? Can your family cover funeral expenses as well as making up for the sudden loss of income?  This is often a time to reassess your life insurance or income protection needs.

Raising a family

When you start or grow your family, this is a good time to consider life insurance. You may have Life insurance in your super, but is it enough to cover the additional cost of bringing up a family if you’re not there?

Income Protection may also be an important addition to your financial cover, providing a continued income stream in the event of a life-changing accident or illness.

Retiring

Did you know that the average life expectancy in Australia is 83.25 years in 2020-2023, compared to 70 in the 1950s?** And whilst the need for life insurance may not be as obvious once the mortgage has been paid and the children grown up with their own families, there are still several good reasons to hold on to it or even take it out. Having life insurance can offer additional financial security and peace of mind in the event you are diagnosed with a terminal illness or sadly pass away.

If you already have life insurance, it make sense to ensure it still meets your current financial needs to help reduce the financial impact that serious illness or sudden death could have on your retirement plans and loved ones.

Important information:

Any financial product advice is general in nature only and does not take into account your individual circumstances, objectives, financial situation, or needs. Before acting on it, please consider the appropriateness of the information, having regard to those factors. Any third party websites or tools referred to are subject to their own terms and conditions and NobleOak Life Limited makes no representation or warranty as to any information on those websites. Persons deciding whether to acquire or continue to hold life insurance issued by NobleOak Life Limited should consider the relevant Product Disclosure Statement and Target Market Determination for the product. NobleOak Life Limited ABN 85 087 648 708 AFSL 247302.

*Research conducted on behalf of NobleOak by The Market Intelligence Co, December 2023 with over 1,000 Australian citizens or residents.

**https://www.abs.gov.au/statistics/people/population/life-expectancy/latest-release