Research shows that 95% of Australians do not have adequate levels of life insurance. Even though many Australians have some degree of life insurance included within their Superannuation, it is thought that many are still underinsured by $100,000 or more. Insufficient amounts of life insurance will mean that your family will not have adequate cover, in their time of need. Source: Lifewise.org.au
Life insurance protects your loved ones with a lump sum payment in the event of your death, or upon diagnosis of a terminal illness.
When applying for life insurance it’s important to understand your policy, be completely truthful when you buy your policy; and ensure your details are up-to-date as your life circumstances change; such as a new child, new home or new job, to help ensure your family is protected when they need it most.
Insurance comparison site compareinsurance.com.au experts in all things insurance, helps you to understand life insurance, and explains how you explore your options and avoid underinsuring your income and life.
5 ways to help you find the right life insurance
1. Duty of Disclosure
It’s really important to be truthful to your insurer when you buy your policy to make sure you have the right level of cover to protect you and your family. A common reason for an insurance claim not being paid is because not all information was disclosed to the insurer at the time of buying the policy. For example, hiding information such as being a heavy smoker, being involved in risky sports or activities, having a serious health issue or a terminal illness, drug use, or even having a mental health condition could result in a denied claim. Even if you have a pre-existing medical condition, you may still be able to get cover, so it’s important to ensure all the information you provide in your application is accurate to have the peace of mind that comes with being protected when you need it.
2. Risky hobbies or job? You can still get cover!
Some recreational activities are considered high risk by insurers and may affect your application for life insurance. For example,
- If you work in a dangerous working environment such as the mining or construction industry.
- If you’re an adrenaline junky and often take part in activities like bungee jumping or car racing.
In these situations you will be able to get cover, but you might be required to pay a higher premium to balance the cost of the added risk.
3. Ensure you update your details
It’s easy to buy life insurance and then not think about it for the next 30 years, but if your circumstances change such as you have children, you move house, or get a better paid job, you should be thinking about reviewing your life insurance. If you don’t keep your policy up to date your insurance may not meet your family’s needs and provide them with important protection.
4. How much insurance do you need? And when?
Compareinsurance.com.au has an online insurance calculator that can give you an understanding of how much insurance would need. How much would you need to maintain your lifestyle, provide for your dependents, as well as cover your debts and household expenses should you pass away or be diagnosed with a terminal illness?
Research by Asteron Life in October 2013 also revealed that Australians let their life insurance policies lapse approximately 5 years before they’re most likely to need them.
The average lapse on a life insurance policy happens at age 44, and the average claim is made around the age of 49, showing that Australians are letting go of their insurance just a few years before they might need it.
5. Know your policy
Every life insurance policy is different, so it’s important to make sure you read and understand the policy documents or Product Disclosure Statement. By reading these legal documents thoroughly you will truly understand exactly what you’re buying and when you’re covered.
Overall life insurance is a very reliable type of insurance that provides your family with financial security. If you provide your insurer with all the information they need, and you’re completely honest with them, you can be confident your promise to protect your family’s financial future is secure - even if you’re not around anymore.
Even if you have poor health, you should still be able to get life insurance – you might just have to pay a little more for it. It’s really important to compare your life insurance options. And a bit of research can go a long way. The best strategy for finding the right life insurance policy is to shop around and compare a number of different quotes from insurers. Make sure that the policy you choose is right for your needs by weighing up the benefits and not necessarily going for the cheapest life insurance premium.
Life is unpredictable and we can’t guarantee what’s around the corner, but we can protect our loved ones. Life insurance provides you with peace of mind knowing that you and your family will be covered if your life is cut short or your lifestyle changes dramatically due to a long-term illness or disability.
Every policy is different, which means that they all have different benefits and different situations that they cover. If you compare multiple life insurance companies, you’ll be sure to find one that has the perfect policy for you.
See my disclaimer.