Helping Victorians to sleep peacefully at night

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Life Insurance provides a lump sum to your family in the event of death or terminal illness of the life insured.

With so many types of life insurance on the market, how can you be sure that your insurance policy covers everything that you need it to? Quite often, it seems that the differences between insurance policies are minute, leaving you confused over which policy is right for you and your loved ones. However, to ensure you get the right level of protection, you need to carefully consider your needs in order to guarantee that your policy is a perfect match for the life you live and the family you love.

What factors could influence the premiums of the insurance policy I choose?
Good question. When it comes to choosing the right insurance policy, some of the aspects as a guide you should take into account are How old are you? And of what gender? How much do you earn? Do you smoke? Do you have a mortgage, or any other debts to pay off? What is the track record of your personal health and family’s health? The wide range of factors which can influence the price of your insurance policy means that no two people need be insured in the same way
Please remember that, when applying for life insurance, you have a duty of disclosure to your potential insurer. This means that you are legally bound to reveal any information that could influence the policy you are given. Failure to do so could result in your policy being withdrawn without refunds, while the insurer may choose to pursue further legal action against you. 

Should I choose a retail product or put it through my superannuation?
There are a number of things to consider, as both options have their benefits and drawbacks. If you choose to buy your life insurance through superannuation, the positives are that it is the cheaper option generally speaking. However, on the downside, the protection offered by superannuation is often very limited when compared with that offered by retail products and does not include trauma cover.
So, you may think that choosing a retail product as your life insurer is more appropriate for you and your family? Think carefully, for there are drawbacks to this too. Retail product premiums are generally higher than those of a superannuation, meaning that they are not accessible for all workers. Of course, there’s nothing to stop you against blending your cover through both superannuation and retail products for your life insurance
If I think that a retail product is the right choice for me, where do I go next?
If you choose a retail product, your next step is to identify what type of cover you would like from the insurance providers. There are a number of different types of insurance available to you, the most common of which are:
Income protection Insurance – It covers generally up to 75% of your annual income if you become sick or injured and unable to continue working. Statistically, this is also the most claimed policy with the insurers and generally speaking is tax deductible
Term life insurance – this is usually valid up until the age of 99. Term life insurance pays out a lumpsum to your beneficiaries in the case of your death, or to you if you are diagnosed with a terminal illness.

Total and permanent disablement policy (TPD) – this cover can work independently of, or in conjunction with, term life insurance. TPD is a lumpsum payout if you become completely and irreversibly disabled or are unlikely to ever return to work.
Trauma insurance – trauma insurance (Sometimes also called as Critical Illness cover) pays out lumpsum from your insurance company if you suffer from any of the conditions listed in the policy. Generally, Severe conditions like stroke, heart attack, major organ failure or advanced stage cancers are some of the conditions which is covered through Trauma option.

BY Abhi Narayan
(Abhi Narayan is a founder and managing director of Insurance Life Pty Ltd. | E: Abhi.Narayan@inslife.com.au)