Insurance Help!!!

[whitestripe]

Hi all.

With the purchase of our first home, I am looking into life insurance. It has been strongly pushed by a lot of friends and family, so we are considering it.

I just don't really know what to do about it though. I've succesfully narrowed it down:

I have two and a half options that I am interested in:

First option: is death & total permanent disability cover (tpd). we are looking into covering around $150k for DF or $100k for myself (mortgage is $304k). cost is $18.30 for DF a month, or $4.50 month for myself for the above amounts.

Second Option: Joint coverage for death or terminal illness (cancer, coronary artery bupass, heart attack, paralysis, stroke, loss of independant existence) at $61.35 per month covered for $200k.

the 'half' option i have talked about is the possibility of talking with a financial planner (free with our bank as part of our home loan package) and seeing if we can coverage like the second option, but tailored to our occupations. we do not work in high risk occupations so the coverage *may* be less cost per month.

some things to note: we do not need to cover the full amount of the mortgage. 200k is the most we would need to, and in the first option we can change the amount covered to suit.

if we take out the second option, we have two months to meet with the financial planner and see if we want to get a tailored coverage. two months worth of the 'second option coverage' will be refunded to us.

the first option is linked with our superannuation fund. it means that for myself (not DF, as he earns too much) i can make up to $1000 contribution into my super fund and get $1500 co-contributed from the government. so technically this offsets my premiums - and i will be saving for retirement.

please ask if there are any other questions. thankyou in advance.

[disneysteve]

It sounds like life insurance works considerably differently in Australia than it does here in the US so I'm not sure if most of us can give applicable advice. Do they sell term life insurance there like they do here? Term insurance is where you pay a set montly premium for a set death benefit for a set term (10 or 20 years most commonly). It is dirt cheap and the best choice for almost everyone.

[whitestripe]

hmm i am not sure. we also have death cover on our current superannuation fund which doesnt cost anything except whatever the fees are each year.
the main thing we were considering is if something happened to one of us where we weren't able to work - death cover doesnt cover those instances. insurance is a gamble in the end but we are just unsure as to how much to gamble :S

[disneysteve]

In the US, life insurance and disability insurance are typically total separate policies, not one and the same. I have term life insurance which will pay a set amount upon my death. I also have disability income insurance that will pay me a monthly benefit if I become unable to work.

[whitestripe]

yes, here you can get them joined so you don't have to be paying a whole heap of different ones.

[disneysteve]

Originally Posted by whitestripe

yes, here you can get them joined so you don't have to be paying a whole heap of different ones.

My life and disability insurance are both from the same company, so I only make one payment that covers both but they are totally separate policies, bought at different times with unrelated terms.

[jIM_Ohio]

There are riders in the USA where you can take a benefit from term policy if you have a terminal illness. This allows for less coverage (don't need both term and disability, only need term).

I have a 500k 20 yr term policy and it can pay out $250k before death if I become terminally ill.

Employers in USA have short and long term disability (for example LTD is 66% of pay, paid until SS eligible, I believe).

[Goldy1]

yea but one could have a terminal illness (ie cancer etc) and one could be disabled and not have a terminal illness(just say something like you became cripled mentally or physically(hate to bring up these scenarios but we are on the topic) so I don't think that would let you take mone yout of term.

Books I read say you are more likely to become disabled, and I heard it is hard to collect on these things.

Guess what tidbit I read yesterday in a book? Insurance companies only pay out death claims to only 1% of the holders of term insurance.

We just bought insurance (life) I hate paying for it, but I remind myself why I got it.

[jIM_Ohio]

Originally Posted by Goldy1

yea but one could have a terminal illness (ie cancer etc) and one could be disabled and not have a terminal illness(just say something like you became cripled mentally or physically(hate to bring up these scenarios but we are on the topic) so I don't think that would let you take mone yout of term.

Books I read say you are more likely to become disabled, and I heard it is hard to collect on these things.

Guess what tidbit I read yesterday in a book? Insurance companies only pay out death claims to only 1% of the holders of term insurance.

We just bought insurance (life) I hate paying for it, but I remind myself why I got it.

My employer has me covered at 66% of my base pay for LTD.

[whitestripe]

here we have workcover, where if you're injured at work you are paid the wage you would have earned until you can return to work (if you cant, then you get a pay out).
i am pretty sure the second option i discussed is very similar to the one disneysteve is talking about that he has.

[ishanbansal]

Try to buy your home insurance with auto insurance. That would save you some money

[Goldy1]

yes I save a bit by combining home and auto with AAA here in MI. THey were going to give me $20 off a year additional from auto and home if I bought term life with them, not a lot but something.

[whitestripe]

just checked back on this thread, thanks for all the ideas guys!