Advivo shares what to consider when insuring for your estate.

 

Thorough estate planning involves putting in place strategies that address all aspects of your situation. Estate planning documents (including Wills, Powers of Attorney and insurance and superannuation nominations) are the tools that are used to implement these strategies that are developed as part of the estate planning process.

Many people take out life insurance as part of estate planning, to provide a financial safety net for their family. It is important to ensure you have the right level of insurance, so that in the event of a death, it will provide the family with:

  • maintenance of living standards;
  • maintenance of ongoing medical expenses;
  • wealth accumulation
  • elimination of debt at the time of death
  • retirement provision for other family members after the death of the insured
  • provision for beneficiaries.

You may choose to hold this cover within your superfund or alternatively, it can be held outside super, in which case your beneficiaries may receive a lump sum from the policy after you are no longer alive.

The amount of life insurance you may need to achieve your estate planning objectives will depend on your circumstances and what you want to achieve. In determining how much insurance is optimal, here are some key things to consider:

  • How much income would your family need if you are no loner able to provide for them?
  • How long would you like the income to be paid for?
  • Would you like your mortgage and other debts paid off?
  • Would you like to leave an inheritance for your children?
  • Are there any costs that would need to be met, such as funeral expenses?
  • What investment assets would be available to help meet these needs?

It is important to review the level of life insurance cover periodically or when personal circumstances change. Events such as marriage, the birth of a child, or taking out a mortgage to buy a new home may make it appropriate to re-assess whether the level of cover remains appropriate or should be increased*.

*This information is general information only and has been prepared without taking into account your personal objectives, financial situation or needs. The information provides a high level summation of selected parts of legislation only. The legislation is complex and includes a number of conditions and overrides that may apply to individual situations. Interpretation and application of the information to your specific circumstances requires consultation with an accountant with a detailed understanding of your personal and taxation affairs and a qualified financial advisor before taking any action.
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The experienced team at Advivo can assist you in preparing and reviewing your estate plan to ensure you have the right level of insurance for your plan. Contact us today at 07 3226 1800 or email us at info@advivo.com.au for more details.