Which level of Cover?
You want peace of mind to know that you and your loved ones are protected in the event of accident, serious illness or injury but you’re not sure what level and what type of cover suits you? CommInsure provides a range of Life Insurance solutions to suit different needs. Below are 3 samples scenarios that may be similar to your circumstance.
For any enquiries, please contact CommInsure Customer Service Centre on 13 10 56 between 8am–8pm (Sydney time), Monday to Friday. Alternatively you can visit any Commonwealth Bank branch or speak to a financial adviser.
CommInsure Case Study (1)
Client Name Alice
Status 27 year old, unmarried with no children,
Alice earns $50,000 income as a personal assistant. Apart from this job Alice has no other income stream.
Alice has the following debts
Credit Cards $3,000
Car loan $15,000
Alice also has $100,000 life insurance cover provided under her superannuation policy, which has an accumulated value of $20,000.
After seeing a friend hurt in a serious skiing accident that left her friend financially vulnerable and unable to work, Alice decided it was a good time to take out insurance so that she could help protect herself financially if she happened to be in a similar situation to her friend.
Alice selected $200,000 life, total and permanent disability and trauma insurance cover in addition to the life insurance provided under her superannuation cover. This combination of cover (under super and standalone insurance) would provide a lump sum if she was totally and permanently disabled, suffer one of the specified traumatic conditions to enable her to pay for any necessary treatment or alterations to her apartment. She would also receive a lump sum if she should die.
Despite these covers, which provided her with a lump sum to help deal with the immediate issues, Alice was also concerned if she should suffer an illness or injury that prevented her from working how she could pay her regular bills and afford to live. So she chose to protect her income with Income Protection Insurance.
Alice’s employer provides up to 4 weeks sick leave, and without a regular salary Alice knew she had no other income to rely on. Alice choose an Income Protection cover with a monthly benefit of $3,125 (being the maximum cover available covering 75% of her income) with a 4 week waiting period and benefits paid through to her 65th birthday. Alice chose to include an increasing claim option, which if should she be on claim, would ensure that the monthly benefit she received would keep up with inflation.
Whilst Alice assumed that her income earning potential will increase over time, she chose to pay level premiums. With level premiums she knew she would be paying a little more than stepped premiums in the first few years of the policy however would save in the long run, as the premiums on a level premium contract are likely to remain the same unlike stepped premiums which usually increase as the insured gets older.
CommInsure Case Study (2)
Client Name Max
Status 35 year old, married with 2 children, earning $60,000 income as an accountant. Max’s wife Sarah (34) is currently at home looking after the two young kids Billy (4) and Zac (2).
Max’s family has the following debts
Mortgage $140,000
Credit Cards $4,000
Car loan $6,000
Max also had $50,000 life insurance cover provided under his superannuation policy
Max was concerned about what would happen to the lifestyle of him and his family if he died or was to suffer an accident or illness that prevented him from working.
Max selected $1,000,000 life insurance and $200,000 Trauma and Total and Permanent Disability insurance cover in addition to the life insurance provided under his superannuation cover. This combination of insurance cover (under super and standalone insurance) would deal with all of the family debts and provide the family with $900,000 to live off should he die. If Max was to suffer a one of the medical conditions specified in his Trauma Insurance policy or suffer a total and permanent disability it may help meet the medical costs associated with the treatment of the condition without the need of having to dip into any personal savings or going further into debt.
Max also considered the need to provide life insurance cover for his wife Sarah. Although she was not working, she was making a valuable contribution to the running of the house and looking after the children. Max decided to cover her life for $500,000 so as to help towards providing external carers if Sarah was not around to look after the children. He included $400,000 trauma and total and permanent disability cover on her life.
Max recently read about children who suffered serious illness and the associated costs in treating these illnesses. As a result he included his two children for $50,000 each for child’s trauma insurance as part of his own Life insurance policy to help towards such costs.
Max was also concerned if he should suffer an illness that prevented him from working he also chose to protect his Income with income protection insurance up to the maximum possible 75% of the current income. Max’s employer provides for sick leave up to 3 months and without employment with his accountancy firm, Max had no other income to rely on. Max decided to choose $3,750 monthly benefit for his Income Protection cover (being 75% of his income, the maximum level of cover offered under Income Protection) with the benefits paid through to his 65th birthday. Despite his currently employer offering up to three months sick leave, Max thought that it was likely that he would be changing employers and knew that most companies offered just 4 weeks sick leave. For that reason he chose a three month waiting period on his policy. Max also chose to include an increasing claim benefit option on his Income protection policy, which if he was on claim the monthly benefits would increase to help keep up with inflation.
Although Max assumed his income will increase over time he chose a level premium option. Level premiums are slightly more expensive than stepped premiums in the first few years of the policy, however over the term of the policy as the longer term savings of level premiums typically far outweighed the short term savings of stepped premiums.
CommInsure Case Study (3)
Client Name Arthur
Status 55 year old, married to Fiona with 3 children aged 17, 19 and 22. The children have finished school, the youngest starting at university next year.
Arthur earns $120,000 as a sales representative for a manufacturing company.
Arthur is planning on retiring when he is 65 and Arthur has no debts.
Arthur has $200,000 life insurance cover included under his superannuation policy.
Whilst Arthur has no debts and his retirement is still almost 10 years away. It is important to Arthur that he should be able maintain his current lifestyle should he no longer be able to work due to sickness or disability.
Whilst Arthur did have a comfortable life with number of assets, including a superb home and a fishing boat, he did not want to sell any of these hard earned assets or eat into his retirement savings to support his day to day living costs should he become unable to work due to sickness or disability.
Arthur took out $200,000 Life cover with $200,000 Total and Permanent Disability cover to pay for any treatment and alterations necessary to his house if he was totally and permanently disabled.
By taking out Income Protection Insurance with a benefit of $7500 per month (being 75% of his current income) to age 65, Arthur felt comfortable that he could most likely retain his current lifestyle without eating into his assets should he be unable to work due to sickness or disability. Arthur also thought it important that any benefits paid under the income protection policy keep up with inflation, and as a result Arthur chose the Increasing Claim Benefit.
Although Arthur expected that he had reached his maximum income earning potential he chose level premiums as it still provided him with an ability to make savings over the stepped premium option over the life of the policy.
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