What is life insurance? (your handy guide)
What is life insurance, and do you need it? Learn how it works, what it covers and more in this handy guide.
Life insurance probably isn’t your go-to dinner party topic. But when it comes to helping protect yourself, it could be worth a look. Especially when life starts throwing grown-up stuff your way, like a mortgage, starting a family, or just wanting to be prepared.
What does life insurance do, exactly?
In a nutshell, life insurance is designed to pay a lump sum to your nominated beneficiaries or estate if you pass away or are diagnosed with a terminal illness¹. That money could help your loved ones manage expenses like the mortgage, rent or bills if you’re no longer around to help financially support them.
It’s about helping the people you care about stay on their feet financially if something happens to you.
How much cover are we talking?
There’s no magic number, so what’s a good rule of thumb? According to the Financial Services Council(opens in a new tab), if you have a mortgage, around 5-10 times your annual salary may provide adequate cover to help your family avoid financial strain.
Of course, it depends on your lifestyle, your responsibilities, and whether anyone’s relying on your income.
Ask yourself:
- How much would your loved ones need to cover everyday costs without your income?
- Do you have a mortgage or other debts that would need to be paid off?
- Are there school or childcare expenses to think about?
- Want to leave a little something behind?
If you need some help figuring it out the Moneysmart Life Insurance Calculator(opens in a new tab) is a tool to get you started. You can also chat with a qualified financial advisor for advice that’s tailored to your personal circumstances.
What types of life insurance are there?
Life insurance isn’t one size fits all. There are a few different types of cover (you’ll thank yourself later for knowing the difference).
With ahm Life Insurance, the following cover is available:
Life Cover: pays out a lump sum if you pass away or receive a diagnosis of a terminal illness¹.
You can also choose from a range of optional extras to add to your ahm Life Cover, such as:
TPD (Total and Permanent Disability) Cover: offers a benefit if you're assessed as being totally and permanently unable to work in any job suited to your training, education, or experience because of illness or injury^.
Critical Illness Cover: provides cover if you're diagnosed with a serious specified condition listed in the PDS, such as cancer (excluding early-stage), a heart attack (with heart muscle damage), permanent loss of independence, or if you require open-heart surgery^.
Child Cover: available for children aged 2–19, this cover can help if your child passes away or is diagnosed with a terminal or specified critical illness^.
What if your life changes (because it probably will)?
New house? New baby? Getting married? Life doesn’t sit still, and neither should your cover. With ahm Life Insurance, you can apply to increase your cover when your life shifts².
Already have life insurance through your super?
Nice! But be sure to check what’s actually included, many super policies may not offer enough cover, or don’t include extra’s like Critical Illness Cover or Child Cover.
Ready to talk about life insurance?
To get a quote for ahm Life Insurance, just head online, answer a few quick questions, and you’ll get a quote in no time.
Get a quick quote online now(opens in a new tab)
You can also contact us on 1300 867 125 if you have any questions.
Things you should know
ahm Life Insurance and ahm Income Protection (collectively ahm life insurance) are issued by the insurer, Zurich Australia Limited ABN 92 000 010 195 AFSL 232510 (Zurich). NEOS Direct, a registered business name of NDLI Pty Ltd ABN 70 665 747 277 AFSL 547119 distributes and services ahm life insurance which is promoted by ahm health insurance (ahm), a business of Medibank Private Limited ABN 47 080 890 259. Medibank Private Limited is an authorised representative AR No. 286089 of NEOS Direct. Any advice provided is general only and doesn’t consider your objectives, financial situation or needs. You should consider these factors, the appropriateness of the advice, and carefully read the relevant Product Disclosure Statement (which sets out the product terms, conditions and exclusions), Target Market Determination and Financial Services Guide before making a decision to acquire, or continue to hold, the product. Your personal information will be handled in accordance with the Privacy Policies of the parties involved. Click to view the NEOS Direct Privacy Policy, ahm Privacy Policy or Zurich Privacy Policy. ¹ Lump sum payable if you suffer a terminal illness and your life expectancy is 12 months or less. See the PDS for full terms. ^ For details on optional Critical Illness Cover, TPD Cover and Child Cover, including definitions, qualifying periods and eligibility criteria, please refer to the ahm Life Insurance PDS.
² Eligibility criteria apply. Please refer to the ahm Life Insurance PDS.