Life Insurance

Life insurance is a good investment, and unfortunately largely forgotten about when it comes to deciding where to best invest your money. Prices can range, but many people in their 20's will have a superannuation fund and your likely to get a reasonable rate from them. As an example I pay $45 per month for $500,000 life insurance that pays out if I die before the age of 65.

$45 per month?! Yes that's right, $45 per month. It's actually quite reasonable when you consider that if you take it out at the age of 20, that's $45 x 12 x (65 - 20) = $24,300. You pay $24,300 and if you die before the age of 65 your insurer will give your wife/kids/family $500,000. It's a pretty good deal, even if you never claim on it $24,300 is a small amount over 45 years to waste. You will spend more on fatty foods over that 45 years. Your premium will likely rise as you age, so that's something to be aware of, but the older you get hopefully the less likely it'll be you need it as you will have other investments supporting yourself and your family. The amount will differ from one insurer to another, but it's definitely worth checking with your superannuation fund as they are generally cheaper, plus the premiums will come out of your super instead of your pocket.

It's also worth considering TPD (total permanent disability) cover, which in my case costs about a third of my life cover for cover of the same amount. If you talk with your super fund you may actually find that you already have life and TPD cover, as it's not uncommon in Australia for employer super funds to by default contain insurance packages. It's important to note though that most default covers will cover you for the same amount you earn in a year and that probably isn't enough. When working out how much cover you need take into account your debts, funeral costs, at least one year of your income and if you have kids you might want to compensate for caring for them as well.