There’s nothing like the peace of mind that comes from knowing you’ve done everything you can to protect the future of the people who matter most to you. That’s why life cover can be so valuable.
Life cover held outside super pays a benefit to you, your nominated beneficiaries or your estate if you’re diagnosed with a terminal illness or you pass away. You, your partner, children or anyone you nominate as a beneficiary1 can use that payment in any way – to pay off debts, take care of the costs of living with a serious illness, or simply cover living expenses until life gets back on track.
We all have people we love and want to protect, which is why life insurance is for everyone. So as a member of the LGBTQ+ community, it’s good to know that when you take out life cover from Zurich, you won't be discriminated against when you apply or when you make a claim.
If you change your name or affirmed gender, or have gender affirming surgery, we can help you update your policy so you’re still covered. It’s also a perfect time to confirm who you want to benefit from your policy if you were to pass away. This means you know your loved ones are protected if the worst happens, even if you’re not out to your parents or community.
It’s important to note here that the ability to nominate a beneficiary can depend on whether your insurance is inside your super.
But while the idea behind life cover is simple, that doesn’t mean all policies are the same. Here are three things to think about when you’re choosing life cover and setting up your policy.
How much cover is enough?
Deciding on the right level of cover is a very personal decision. You’ll want to think about how much money your partner, your family or other dependants would need to replace your income and provide financial support if you were no longer around. That may include finalising your estate, covering funeral costs, paying off your mortgage, credit cards and other debts, taking care of childcare costs or school fees, and covering ongoing living expenses.
When thinking about what your beneficiaries will need, remember to take into account other funds your loved ones may be able to access as part of your Estate. These might include money from your super, your savings, the sale of any investments you have, even your leave balance if you’re working.
To help you, the Australian Securities and Investments Commission (ASIC) has developed a life insurance calculator to estimate the amount of cover you may need.
For personalised advice from a qualified professional, talk to a financial adviser. By looking at your current situation and future goals, they can help you decide how much life cover you may need, as well as how your needs may change over time.
How is life cover paid out?
Your life cover benefit is typically paid to your nominated beneficiary (the person or people you name who’ll benefit if you pass away) or the policyholder, such as you, your spouse, or your estate.
Depending on the policy, you may be able to decide how your loved ones receive the payment – in most cases a lump sum will be your only option, but some policies allow for ongoing payments or a combination. A combination could help your family take care of initial expenses, such as paying down debt, then use the regular payments to cover ongoing living costs.
If your policy is held inside super, the rules are a little different. Because the trustee of the super fund is the policyholder, your benefit from the insurer will go into your super account. The trustee will then distribute that benefit to your beneficiaries, or to your estate.
The rules are complex, and everyone’s situation is different, so it’s important to seek professional advice.
How is my policy structured?
When you buy life cover, it’s either a stand-alone policy with its own terms and conditions, insurance within superannuation, or a linked policy including total and permanent disability (TPD) and/or trauma cover. Linking policies might reduce the premiums you pay for the policies linked to your life insurance, but it may also affect the total benefit if you need to make a claim.
For example, let’s say you have a $1 million life cover policy linked to a $500,000 TPD cover policy. If you are paid a claim on your TPD cover, your life cover benefit will be reduced by an equivalent amount.
The good news is that you may be able to buy back extra life cover in the future if your policy has that option.
