Why do single income families get life insurance?
Whatever their situation, a single income family may be more affected if something interrupts the income earner’s ability to work. Different types of life insurance can help to reduce the financial risks associated with sickness, injury or something worse.
Here’s what we mean:
Sickness or injury can mean extended time off work
Long-term sickness can be a major worry. Once you’ve used up your sick leave, you could use annual holiday leave or ask your employer for sick leave in advance. But if weeks become months, what’s your financial back up plan? If you can’t work due to an injury, rather than sickness, you might get some payment from ACC - but will it be enough to meet all of your family’s expenses?
Income protection cover can pay a monthly benefit if you experience extended sickness or injury recovery and are not able to work. It typically pays a percentage of your pre-tax monthly income. Payment starts after a period of time that you choose when you take out your policy. When you take out the cover you also select how long you’d like payments to last when you’re sick or injured and can’t work.
A serious illness changes the future
If you’re diagnosed with a serious condition that will stop you from working, Work and Income might provide a supported living payment, if you meet specific criteria. But will the payment be enough to cover your family’s living expenses?
Trauma cover can pay a lump sum if you’re diagnosed with a specified medical condition, which is defined in your policy. While you focus on getting better, the money can help to repay or reduce a mortgage and cover household expenses.
You become disabled and working is no longer possible
Total and permanent disability cover can pay a lump sum if you’re totally and permanently disabled and unable to work ever again.
You die or are diagnosed with a terminal illness
Life cover can pay a lump sum if you die or are diagnosed with a terminal illness and have less than 12 months to live. It can be a way to provide for your family financially, when you’re no longer there for them.