Life Cover

Life Cover Made Simple: The Basics You Need to Know with Efficient Wealth

No one can predict the future, and while we attempt to protect our family, unexpected events can upset our financial security at a moment’s notice. Life cover, also known as life assurance, acts as a safety net, protecting your loved ones financially if you were to pass away. But with the plethora of options and considerations available, how can you be certain you have chosen the correct one?

In this brief guide, the expert financial planners at Efficient Wealth will simplify the important aspects you need to know and understand to make informed decisions about life cover.


Understanding the Purpose of Life Cover

The primary purpose of life cover is to provide a financial safety net to your beneficiaries (dependents you nominate like a life partner, children, or friends) upon your passing. It can help them maintain their financial well-being and cover expenses, such as paying the bond, daily and monthly living expenses, or your children’s education once you are gone.

Life cover ensures your loved ones are not burdened by financial hardship during this difficult time and beyond. It provides peace of mind knowing they can face life’s challenges without the added stress of financial instability.


Different Types of Life Cover

There are two main types of life assurance. These include:

  • Term life cover: This offers coverage for a specific period over a set number of years. It is generally more affordable and ideal if you have financial dependents who rely on your income during a specific period of time.
  • Whole life cover: This provides lifelong coverage, generally until your passing. It accumulates a cash value component over time, which you can potentially access through loans or withdrawals. However, whole life cover comes with a higher premium compared to term life cover.


How Do You Determine the Right Coverage Amount?

There is no one-size-fits-all answer when it comes to the ideal coverage amount. Here are some factors you can consider:

  • Your dependents’ financial needs: How much would your family require to maintain their current lifestyle after you have passed? Consider outstanding debts like home loans and future expenses like your children’s education.
  • Your income: How much income do you currently contribute to your household? Aim for a coverage amount that would replace your income for a set period.
  • Your existing assets: Do you have other assets like savings or investments that could supplement your life cover benefit?


4 Tips for Choosing Life Cover

Here are four tips to help you choose the right life cover:

  1. Compare quotes: Obtain quotes from different assurance providers to find the best balance between coverage and cost.
  2. Consider your health: Pre-existing health conditions may affect your eligibility or premium amount. Be honest when disclosing your health history.
  3. Review the policy details: Understand the terms and conditions, exclusions, and claims process before finalising any policy.
  4. Seek professional advice: A trusted financial advisor can help you assess your needs and recommend suitable life cover options.


Efficient Wealth: Effective, Efficient Life Cover Solutions

At Efficient Wealth, we understand the importance of safeguarding your loved ones’ financial future. Our qualified, experienced team can guide you through the life assurance selection process, ensure you get the right coverage at a competitive price, and answer any questions you may have.

We work with specifically selected assurance providers to find a plan that aligns perfectly with your unique needs and budget. Contact us today for a no-obligation discussion about your family’s well-being.