How to buy life insurance if you're LGBTQIA+

An interesting question we're often asked is,
'Who are the most uninsured people in the community?'
The answer might surprise (and sadden) you.

Young male P plate drivers? Young Tradies? Army Reserve personnel? Single mothers? No.

The Australian LGBTQIA+ Community is one of the most underinsured and underserved markets with financial services.

This of course then leaves them and their families at greater vulnerability than their straight counterparts.

Jump Ahead

We know that, as an LGBTQIA+ person (or someone who goes without labels entirely), you have specific risk protection needs.

Being able to get your life insurance sorted is a key part of everyone's backup plan.

• But it's especially important for LGBTQIA+ people who usually have more financial concerns and less financial support than their straight peers because of their gender identity, sexual orientation and lack of supportive traditional family structures in retirement.

Today, stigma, bias and discrimination in financial services and the community at large present an insidious barrier to many LGBTQIA+ people wanting to access financial advice, with many finding themselves disadvantaged by a system that defaults to seeing everyone as the same.

Read more about What has sexuality got to do with a life insurance application?

Protecting our Rainbow Families

Of the approximately 35,000 same sex couples across Australia, about 12% are known to be raising children.

And this does not take into account those children who may have been raised from birth by a co-parenting gay or lesbian couple, raised by a single parent, or conceived in the context of previous heterosexual relationships.

Fact: Australian life insurers in 2019 paid over 100,000 claims amounting to over $12 Billion. The daily claim amount paid was more than $26 million - and none of those people were expecting to need to claim on their life insurances.Drew Browne

What can life insurance do?

Life insurances are there to protect the people who matter most to you by;

• Replacing your income,
• Paying out the mortgage debt,
• Removing the need to pay rent for the future, and even
• Replacing the amount of income you would likely have expected to have earned for your family over the course of a lifetime - if your life is cut short by an unexpected death or terminal illness.

This holds true no matter who you love or your gender identity.

Why LGBTQIA+ people need life insurances?

We all start off our journey in life having less money than we need and more expenses and responsibilities than we can usually manage alone.

• This is where being able to transfer these major financial risks to a life insurance company to shoulder for you, comes in handy.

Getting your life insurance cover sorted while you're still young and healthy, can also lower the long term costs and protect you and your family if health issues crop up later.

What can Life Insurance do for a LGBTQIA+ person?

Life Insurance can be part of a powerful backup plan that address three main concerns:

• Protecting you and your loved ones

If people depend upon you financially (or even emotionally) then life insurance cover is usually a must.

Many LGBTQIA+ Australians are raising kids, paying high rents, buying houses on dual incomes and often being the emotional and financial support (and future protectors and guides) for many nephews and nieces.

Some are even looking after frail aged parents or friends.

• Payout your debts

If you have a mortgage debt or paying rent, a car payment or credit card debt, (and in Australia who doesn't), life insurance can make sure that all debts will be paid out if you unexpectedly passed away or even if you become terminally ill.

Being able to know that your debt won't burden your family if you're not there later on, can provide everyone much needed peace of mind.

• Protecting the future

Life Insurance provides financial security to help loved ones complete their education, live a fabulous life, retire in an area that's supportive and safe for them.

It can even leave a legacy to make a difference that lasts after we’re gone to our favourite not-for-profit or worthy cause.

How much life insurance do I need?

How much life insurance you may need really depends upon how much living you're planning to do?

• When thinking about how much is enough, working with a financial advisor is the only real way of knowing how much you need, so that you can decide how much you actually want.

So until you have that conversation with your financial adviser, here are four main guiding principles that many people like to think about when answering that question: How Much Life Insurance Do I Need?

The quick answer is, you need enough of what you want

Here are  four scalable ways to think about what you may want:

• Enough to pay out all your debts, or
• Enough to pay out all your debts + replace your income, or
• Enough to pay out all your debts + replace your income + buy a nice place to live, or
• Enough to pay out all your debts + replace your income + buy a nice place to live + have sufficient to provide a legacy for a new child, or a special cause that's important to you and + whatever else you want to achieve for your family of choice.

Let's look at these in more detail

Enough to pay out all your debts.

If you have mortgage debt, or are paying ongoing rent, (and credit card debts) you’d want to make sure if you were to become terminally ill - that all these debts could be paid out, and if you were to unexpectedly pass away, that your partner and family of choice would not have to deal with the trauma of losing you and then have to deal with the debt too.

Did you know 30% of all life insurance claims are for terminal illness?

Enough to pay out all your debts + replace your income.

In addition to covering their mortgage debt or rental debt, many people consider also replacing their income for 5 or 10 years of value. Some people even choose to replace the lifetime value of their income.

So, if your mortgage is $800,000 and your income is $80,000 a year and there's 30 years remaining until you retire, a 'how much do I need calculation' might start with something like this example:

$800,000 + ($80,000 x 30 years) = $3,200,000. (ie: $800,000 + $2,400,000)

Sure, as you reduce your debts and you get closer to retirement, that calculation can be revised down as needed, but this is just a practical example of how thinking of replacing your income as a strategy is also part of life insurance planning.

Enough to pay out all your debts + replace your income + buy a nice place to live.

If you're renting a home, chances are you would not want to be forced to move out because you could afford the continued rent, if you suddenly faced living with a terminal illness.

Add to that, your partner (or future partner) would probably not want to move away from their established support systems and community if you were to unexpectedly pass away and your kids forced to move schools at a time of great stress etc.

Enough to pay out all your debts + replace your income + buy a nice place to live + have sufficient to provide a legacy for a new child or a cause that's important to you and + whatever else you want to achieve for your family of choice.

Well, as you can see, the question of ‘How much life insurance you may need’ it really depends upon how much living you're planning to do?

Life insurance gives you choice and the security of knowing that if life doesn’t work out just the way you expected, you have a backup plan for you and your family of choice - regardless of who you love.

Learn more about this hot topic and watch one of our fun explainer video, How Much is Enough

The best-to-budget approach

Regardless of how much life insurance you need, we understand that all decisions are ultimately determined by a person's budget and a best-to-budget-scenario is usually what most people look for.

When you're beginning to set a budget for your life insurance needs, you're usually making a medium to long term decision.

So whether you decide to pay insurance premiums personally each month or once a year out of your superannuation fund - be sure to have that conversation with your financial adviser.

The importance of naming your Life Insurance Beneficiary in your policy

Naming a life insurance beneficiary is particularly important for LGBTQIA+ people.

The sad reality still is that many LGBTIQ+ people have to protect themselves (and their partners) from the members of their family of birth (biological family) especially when it comes to Will's and Beneficiaries of Life Insurance payouts and Super death benefit payout.

Life insurance beneficiary nominations take priority over a Will.

Naming a life insurance beneficiary can provide an inheritance for your loved ones that your biological family members can't take away from them.

Naming your own life insurance beneficiary is a way to sidestep the emotional and financial struggles down the road if your Will is challenged by unsupportive (maybe downright homophobic) biological family members, who suddenly feel financially entitled.

What happens if I do not nominate a Life Insurance Beneficiary?

If you don't name a beneficiary in your policy, the money may go through to your Will (or estate) and be subject to taxes or used to pay down any of your outstanding debts, before the leftovers are challenged by your biological family members, or anyone who feels they have an entitlement to your money.

How LGBTQIA+ people should go about buying life insurance in Australia?

Lesbian, gay, bisexual, transgender or queer people can apply for life insurances in the same way anyone else can on the same application.

The difficulty occurs when;

• you don't know which life insurance company will or will not accept your application, and
• what additional questions you will be asked, and
• what additional medical information you’re going to be asked to supply.

During our last review of life insurance providers offering insurance through a superannuation funds, none of them were prepared to offer insurance to people living with HIV.Drew Browne

Now while this might not relate to you, the problems arise when these types of restrictions are not disclosed to you before you begin an application. This means you can spend a lot of time giving a lot of your private information to a stranger, only to find out that you never really had a chance of getting cover in the first place.

• To add insult to injury, under the duty of disclosure, you may later then have to explain on every insurance application why you were formally declined insurance cover by a previous life insurance company.

This compounding effect often makes many LGBTQIA+ people simply give up trying.

How LGBTQIA+ people are overcoming their barriers to Good Financial Advice

How do LGBTQIA+ people find an expert financial adviser who truly understands their unique needs and circumstances and who has the expertise to specifically tailor a solution for them, stigma and discrimination free?

• Well, the good news is if you're reading this, you have already found the answer at Unusual Risk Insured.

We are the experts in helping people with complex health needs, hard to insure occupations and diverse communities - get their life insurances sorted - Australia wide, stigma and discrimination free.

Life Insurance for non-binary people

If you're transgender, non-binary or gender queer the process of getting your life insurance ordered can be a little more complicated, so this makes the process of finding the right insurance policy for you and your loved ones, even more important.

Gender at birth, statistics and out of date Underwriting Rules

Life insurance companies rely upon very big amounts of historical data to make their statistical predictions. Much of this is information is binary in nature and forms part of a companies proprietary Underwriting Rules. For example, as a group, cisgender women live longer than cisgender men.

• The statistical reality is, cisgender males life expectancy is always lower than cisgender females life expectancy.
• So as a life insurance company calculates its statistical risks of when they will have to pay a claim, a person's gender-at-birth is one of their considerations.
• This means most companies will ask individuals to apply with the sex-assigned-at-birth.

At some point, we might see more than two options on life insurance applications.

Right now, we don’t.

Life Insurance for intersex people

If you're intersex, transgender, non-binary or genderqueer, working directly with the experts at Unusual Risks Insured is your best option to help you better understand your options and to represent your situation to the right insurance company for the best chance of success.

The start of the solution

The LGBTQIA+ Community needs to work with an expert who truly understands the unique needs and circumstances of LGBTQIA+ people and who has the expertise to specifically tailor a solution for stigma and discrimination free.

Unusual Risks Insured was the first specialty financial advice brand to make it possible for People Living with HIV to get their life insurances sorted.

Today we continue to work with high quality insurance providers who want to support the LGBTQIA+ Community with us.

• Our clients are simply encouraged to nominate the gender they feel most comfortable with and they will then assess your life insurance application in the usual fashion, based on your medical and lifestyle history.
• To make the process easier, you only ever have to deal with a single person at Unusual Risks Insured for the entire application process and ongoing management.
• You will never be contacted by an unknown person from an unknown life insurance company asking personal questions

Take the next step

Your gender or sexual orientation should never hold you back from applying for Life Insurance.

Regardless of whether you're Out or not, whether for safety or other reasons - that's your story to share only if you choose - we just want to help you get your life insurances sorted and better protect our Rainbow Community and our Rainbow Families.

• Now that you've found the experts who understand the unique needs and circumstances of LGBTQIA+ people, we'd love to specifically tailor a solution for you and your family of choice.
• We can help you Manage your Life Insurance and Super Account Beneficiary Nominations and we can help you and your family of choice get your life insurances sorted with your dignity intact so you can life a safe and secure fabulous life.

And just so you know, while we proudly serve the LGBTQ community, we are open to clients of all identities.

Read more about Our Services.

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