Your friends and colleagues might have suggested you to buy a life insurance policy to make life easier of your loved ones, should the worst happen to you. This brings up some haunting thoughts.

But what exactly is life insurance and how will it help your family? To put it plain and simple, life insurance ensures a family to enough resources to fall back on in case the insured breadwinner dies an untimely death in an accident or sue to some disease. Basically, an insurance policy pays out in the event of a death, and is designed to provide for any dependant’s left. This amount can be utilized by the surviving family members to cover any unpaid mortgage payments, or to square up any debts and to pay the funeral expenses. It is guaranteed that your dependants are protected and can continue living their accustomed lifestyle when you have life insurance coverage.

Thus, the benefits of buying a life insurance policy cannot be ignored and denied. But before signing up you should consider various policies and settle only for the one that offers the best life insurance quote.

Owing to the emergence of many insurance companies in Australia, you must know how to compare the different types of policies as well as the different providers. By exploring various insurance options and comparing quotes, you can stay carefree in the future knowing all your financial concerns and worries will be taken care of. After all, the last thing you need in your life is to discover that your life insurance plan has insufficient coverage.

Life insurance should be seriously considered as it allows the surviving members to continue living without any financial restraints if a loved one passes on. Conducting your own life insurance quotes comparison can be tricky, so enlisting the help of a financial adviser or online comparator may help you decide on the right policy. Life Insurance Direct is an online life insurance comparison website aimed at delivering its clients competitively yet comprehensive policies.

Life insurance quotes vary between each insurer and you may ask the question why. One of the main reasons behind the differences is because each insurer will assess the risk of offering you cover differently.

Life insurance calculations

When calculating rates, a life insurance company will typically look at your age, gender, and smoking status to help determine your premium. The insurer may also factor in things like your body mass index (BMI), occupation, lifestyle, and medical history.

Life insurance differences

Generally speaking, males pay more than females; and smokers also pay more than non-smokers due solely on life expectancy. So the healthier you are, the lower your premiums usually are.

Life insurance Australia wide

Premiums in Australia do vary, and it is certainly worth your while obtaining a few quotes and making a comparison. You can choose to do this yourself, or have an online comparator complete this task for you. You also have the option of speaking to a financial adviser who can help you make an informed decision.

Following on from our previous post, here are some more common mistakes with life insurance policies.

Life insurance mistake 1 – Allowing ‘sticker shock’ to stop you getting life insurance

Yes, life cover is a significant bill each year; you can’t quite cover it by giving up one weekly cup of coffee. However, life cover has immense value to your family … and the best things in life certainly aren’t free!

Life insurance mistake 2 – Not completing the application yourself

Many families have one partner that is the ‘paperwork partner’, responsible for filling out forms and that sort of official business. However, application questionnaires get personal – very personal! Given the gravity of the consequences if somebody else fills out your form and it isn’t quite right, it is essential that you be highly involved in filling out your own application. This is important because you need to satisfy the insurer’s ‘Duty of Disclosure’ when completing the application for a life policy.

Life insurance mistake 3 – Contributing to life insurance at the expense of superannuation

These two financial products are equally important, but very much separate contributions to your and your family’s lifestyle in the future. There are different tax advantages with each, and it is smart to devise an investment strategy that allows you to maximize your contributions to both. Doing this rather than trading off between life cover or superannuation will generally create the best outcome for your lifestyle.

Arranging life insurance is a little more involved than arranging car insurance – however, it is a single-time activity that can have a lot of impact on your family’s future health and happiness. There are a few simple steps to getting your life cover right – calculate your benefit amount, get quotes, look at the PDS and insurance contract and select your insurer … and then simply pay your premium! However, there are some common assumptions that people make that can result in a far from ideal result … today we check out 6 more of those common mistakes with life policies.

Life insurance mistake 1 – Not insuring or undervaluing a non-working spouse

Many people assume there is no point insuring the life of someone who doesn’t contribute financially to the household … forgetting that non-working spouses actually contribute a great deal! Life cover for a non-working spouse should cover childcare bills, the cost of hired household help, take away meals, gardening etc. If it doesn’t, the surviving partner will have stress levels through the roof while grieving and will eventually need to cut back their working hours to better cope.

Life insurance mistake 2 – Glossing over the question of stepped or level premiums

Many people choose stepped premiums for their life policy, because level premiums are far too expensive in the early years while you still have children and a mortgage. However, you need to remember that your policy will eventually become a sizeable bill, just at the time when you’ve retired and have little money, but are closest to collecting the benefit. 

Life insurance mistake 3 – ‘Satisficing’ with your life insurance policy

Some decisions in life work best for ‘satisficers’ – those who go with the first available decent option. However, life cover should be a lifetime commitment! It’s worth spending the time to review a wide selection of companies, not just the first two.

You shouldn’t need to cancel your life insurance policy, you took it out for a reason, didn’t you? And it’s true that generally speaking life insurance premiums increase as you age, so if you purchased your life insurance policy a long time ago it may be prudent to hold onto it!

However there are some circumstances where it may make more sense to cancel your life insurance policy. Read on to learn what to do if you want to cancel your life insurance policy

How to cancel your life insurance policy in Australia

Simply write a plain language letter informing your life insurance company of your choice, and either:
• Send it to them via registered post
• Fax it to them, and request a written confirmation of fax received
• Email it to them with a read receipt request, or email it to them and ask for a confirmation email back when it is received.

Should I get legal or financial advice before I decide to cancel my life insurance policy?

Some people advise you to get legal or financial advice if you wish to cancel a contract within the cooling off period. This is not necessary for life insurance contracts – the laws are designed so that you don’t have to go to the extra expense of getting legal advice.

Will I get all my money back if I cancel my life insurance policy?

How much money you get back can vary according to the insurer. Some will refund the entire amount, some will refund the entire amount less any government charges, and some will also charge you an administration fee to cancel within the cooling off period.

Did you know there is a cooling off period for life insurance policies? Most people are aware that you have a cooling-off period when buying a house … some are also aware that if you buy a car from a dealer, you also get a cooling off period. However, most people aren’t aware that life insurance policies have the same sort of grace period!

Life insurance policies in Australia

The government requires life insurance companies to offer a cooling off period of at least 14 days … and it can be a very wise long term decision to utilise it. Today we check out how you can best make use of your cooling off period in life insurance contracts.

Australian life insurance policies have a 14 day cooling off period

The 14-day cooling off period for life insurance contracts mandated by the government:

• Starts either when you receive your Certificate of Insurance (and the associated policy document), or five days after you signed the contract or paid your premium
• Last for 14 days of any type. Where some cooling off periods measure time in clear business days, life insurance contract cooling off periods are measured in ordinary days.

Life insurance certificate of insurance & policy documents

Note that if you haven’t received your Certificate of Insurance and policy document within those five days after you’ve signed the contract, you should follow up immediately with the insurer – otherwise time will be ticking away and you won’t have the specific information you need to make sure the life insurance suits you.

What should I do in my cooling off period for life insurance?

You have several options:

• Closely review the policy document yourself
• Have a financial adviser review it
• Have your legal representative review it

Remember that, with general insurance, if you make a claim during the cooling off period then you don’t get your free cancellation rights if you find that the contract actually doesn’t suit you. With life insurance, this should almost never be an issue!

If you believe your life insurance premiums are higher than the average person, some reasons may be poor health or hazardous occupations and past-times.

High life insurance quotes

Another reason why your lif einsurance premiums could be higher than average, may be due to the company you bought the policy from. Ask yourself if your life insurance company asked you a lot of questions when applying for cover. If your insurer did not ask many questions when you applied for cover, then they have not assessed your level of risk very extensively, possibly resulting in a higher premium.

What can I do if I’ve been given high life insurance quotes?

No matter what the cause of your higher premiums may be, you usually have the option of obtaining another quote from a different insurer.

Be sure to compare apples versus apples as there can be big changes in premiums costs by not comparing like with like.

As with many financial products, it is vital that you read and understand the product disclosure statement (PDS) of your life insurance policy. If you and a spouse have a life insurance policy, you can read the PDS together and ensure that you both understand the terms outlined in your life insurance policy. If there is anything you don’t understand, seek help from a professional such as a life insurance adviser or financial planner.

Comparing life insurance policies & quotes

When decide to compare life insurance policies, be sure to obtain a number of life insurance quotes. Apart from the final premium, you may like to compare definitions outlined in the product disclosure statement (PDS). You may also like to compare any built-in or optional benefits that may suit your situation.

Learn what the extra benefits are in your life insurance policy

One particular benefit which many people have found useful is the funeral advancement benefit. There are also benefits and clauses which may be valuable depending on your occupation. Again, you should read and compare the PDS for each company.