Life Insurance
Life Insurance Explained
Why do I need Life Insurance?
Nothing could be more devastating than losing a loved one in the prime of their life. However this is the unfortunate reality for some Australian families. Imagine the impact of losing the bread winner or caretaker, not just emotionally but also the financial implications of what this can possibly do to a family. Most families in Australia faced with this situation aren’t sufficiently prepared, and the family’s basic lifestyle factors are usually severely impacted.
Life Insurance provides an easy and effective back up plan to this terrifying situation. Consider the costs of daily living; mortgage payments, credit card payments, car payments, clothing, child care, school fee’s, electricity, gas, and food bills the list goes on and on. The costs can add up to tens of thousands every year just to survive, let alone considering a good lifestyle.
Life Insurance is a product that will pay a lump sum or annuity (payments made in increments) in the circumstance of a loved one passing away from any circumstance, providing security for a family.
Unfortunately, the majority of Australian families are under-insured and feel that minimal coverage supplied in superannuation or government assistance will provide them with a back up if the worst were happen. However, if you consider the average Life Insurance Cover in Australian super funds is approx $200k and Australian government assistance amounts to $300 per week, the bills will pile up very quickly. Nothing could be worse than having to sell the family home!
How do I apply for Life Insurance?
There are a several reliable, reputable companies that offer many different variations of life insurance. You can apply directly with many insurers or alternatively apply through your insurance or finance broker. (see related article “Broker vs Direct”) However be mindful that brokers will generally focus on the high-end of the market.
Similar to purchasing many general insurance products (ie car and home and contents insurance) you can go directly to the insurer by simply contacting their respective contact centre and make an application over the phone.
You will most probably be asked questions pertaining to your previous medical health, family history or in some instances be required to take a medical in your application for life insurance. Life Insurance is not a guaranteed acceptance product and depending on your medical history you may be declined for the product or attract a loading (a higher premium to reflect the higher risk to the insurer). Be mindful that insurers have access to your medical history in event of passing and will most probably deny a claim if deliberate non-disclosure of pre-existing medical conditions is discovered from Medicare records.
Smokers generally attract higher rates than non-smokers.
What features does a Life Insurance policy offer?
- Payout amounts generally between $50,000 and $10,000,000
- A lot of policies have early payout options if you are diagnosed with a terminal illness
- A lot of companies offer a fixed premium offer whereby your coverage amount decreases over time as opposed to your premiums increasing.
- Options of either a lump sum payout or annuity option
- Most policy pay outs are tax free