For many Kiwis, planning for an uncertain future is something they tend to put off. Whilst nearly half of people in a recent survey said they thought about how certain events could impact their finances, only 25% have some type of plan in place to help protect their financial future.1
However, the unexpected can happen—as much as we hope it never will. A sudden death or terminal illness diagnosis could leave your family struggling to pay the bills, possibly switching schools or even needing to sell your family home. Taking steps now to help keep this from happening could give you and your family some much needed peace of mind.
Life insurance is one way to help protect your family’s financial future, but it could also do more than that.
Here are 10 things a life insurance benefit could be used for:
1. Cover medical expenses
Though life insurance and death often go hand-in-hand in many people’s minds, it may also help if you develop a terminal illness. Some insurers offer early payment if you’re diagnosed with a terminal illness. That way, your family could use the money to help pay for in-home care or other medical expenses.
2. Pay for the funeral
Did you know that the average funeral in New Zealand costs around $9,000? That’s a lot of money to come up with—often on short notice. But life insurance could help cover this expense. Many policies will pay a small portion of the total benefit amount in advance, so your family can plan your funeral service with less worry about paying these bills.
3. Travel to visit you or attend the funeral
A terminal illness diagnosis might mean that family living abroad or hundreds of kilometres away may want to come visit before you’re gone. And of course, these same people will probably want to be with your family during the funeral. Life insurance could help them get there, paying for petrol, airline tickets or whatever else they need to make the trip.
4. Take time off work
When a loved one is diagnosed with a terminal illness, their partner often wants to take time off work to care for them. The early payout that comes with some life insurance policies, could help them do this with less worry about taking unpaid leave. It could also be used to take an extended period off work to grieve once you’ve passed away.
5. Replace lost income
If you’re the primary breadwinner, losing your income could potentially be devastating for your family. Life insurance could help protect their financial future by replacing this lost income. Even if you’re not the only earner in your household, life insurance could be helpful, particularly if your paycheque is needed to cover the bills.
6. Help eliminate debt
Unfortunately, your debts don’t disappear after you pass away. Your family could be left with a mortgage and car payments, not to mention any credit card debt or other loans you may leave behind. The money from your life insurance could help them repay any large or small debts.
7. Help cover school fees
Losing a parent can be tough, especially for young children. Often, keeping up their regular routine helps them manage this loss. Life insurance could help with this, providing money to keep paying school fees, so they don’t have to switch schools. The benefit could also be put towards university, allowing your children to pursue the future you’ve planned for them.
8. Take a special trip
You probably want your family to be happy, even if you’re not there to enjoy life with them. A life insurance policy could help your family take a special trip to remember you by. That could be your spouse revisiting your honeymoon spot or your kids recreating a favourite holiday with their own families.
9. Leave an inheritance
We’d all like to leave a little something behind for the ones we love when we pass away, and life insurance might help you do that. The benefit could be put towards a down payment on a house for your kids, set up savings accounts for your grandchildren or help them kickstart any other big dreams they may have.
10. Make a charity donation
A final donation to a worthy cause could be a wonderful way to create a legacy. Life insurance could be one way to do this. You might choose to earmark a portion of the benefit amount for a favourite charity or non-profit organisation. These plans can be written into a Will to let your family know your wishes when the time comes.
As you can see, life insurance could help you secure your family’s financial future and so much more. It might be hard to imagine their lives after you’re gone, but you could give your family much needed peace of mind by taking out a life insurance policy.
Ready to get covered? Request a free life insurance quote from Momentum Life!
1. Financial Services Council, Risking Everything: Insight Into How New Zealanders Manage Risk, June 2019
Disclaimer: The information provided in this article is of general nature, and does not take into account your personal situation. You should consider whether the information is appropriate to your needs or seek professional advice, where necessary.