Life Insurance is not about you. Life insurance is about your loved ones and ensuring they’ll be looked after financially. Without a proper or adequate term life insurance policy, you risk your dependents being left in financial disarray.
With life insurance you’re able provide your family with a financial safety net. They’ll be able to pay for everything, including the mortgage repayments on the house, utilities, car insurance and groceries.
Usually purchased as either a salary replacement so that your spouse and/or children are able to maintain their standard of living or as a tool to pay off your debts and pay for funeral expenses.
Imagine your family is having to deal with your death and then finds out how ‘bad off’ your financial situation truly is. They want to give you the funeral you wanted, but after going through your bank statements, they realise you only have about $1000 in your bank account, you were completely behind on your bills and have no term life insurance.
Within a few weeks of your passing, the shut-off notices start to arrive. The bank calls daily to inquire about outstanding mortgage payments. You’re family now has to give up the house they grew up, give away their family pets and move into a cramped two bedroom apartment.
Life insurance is a type of policy that pays a lump sum benefit to your nominated beneficiaries upon your death or upon diagnoses of a terminal illness.
This happened to 20 year old Brittney LaCombe, after her mother passed away the day after Mother’s Day. You can read her award winning essay at www.lifehappens.org/past-scholarship-recipients/brittney-lacombe/.
Clearly, life cover is often a neglected area of personal finances. We hope this article provides you with the necessary information to make an informed decision regarding your family’s future financial needs.
A term life insurance policy can:
Whatever you reason for purchasing life cover , the policy can give you peace of mind knowing that upon your death, your loved ones will be looked after.
The best time to get life cover is now. The worst time to buy life cover is when you need it. Older people and those with an illness or disability can pay much higher rates for life cover . It’s advisable that you buy your policy as early as you possibly can.
You generally only require life insurance when other people depend on your income. If you have a spouse and/or children dependent on you income or you’re taking care of your parents’ financially, then you should get a life policy . Especially if you have a mortgage and still have many years left raising your children. The 6 most common reasons people take out life cover is because:
You should also consider what ongoing commitments and obligations you have. If you or your partner have taken out a loan, or have bought a house – and one of you passes away, the other may not be able to handle the payments on their own.
You’re unlikely to need life insurance if:
When you do buy life cover , make sure you buy enough. The main purpose of the cover is to prove a lump-sum payment that replaces the deceased person’s income. So, the question you need to ask yourself is “How much income will I need to replace?” Also, consider the following:
The answers to these questions will influence your decision on how much coverage you need. Speak to a specialist advisor about your policy options in making your policy more affordable, whilst still ensuring it meets your needs.
In general, the more protection your policy offers, the higher your premiums. When determining how much you’ll need, figure out how much cash and income your dependents would have if you were to die today, and the amount they would actually need to maintain their current lifestyle. Your chosen policy should come as close to making up the difference as you can afford.
Generally insurers offer Level, Stepped and Hybrid premium options.
All other things being equal, the younger you are the less expensive your life cover will be. This might be due to younger people having fewer diagnosed and undiagnosed health conditions and a longer life expectancy.
Your gender is an important determinant of your future health and well-being.
Smokers pay a higher premium for a life policy due to their increased risk of ongoing health problems and because they have a shorter lifespan than non-smokers.
It’s important that you fully disclose all pre-existing medical conditions at the time of your policy application.
Insurers generally offer a number of additional cost policy options that are designed to further enhance your policy.
Make sure you speak with a specialist consultant at Life Insurance Direct about options available to you, including:
When you complete your application , it’s vital that you disclose any pre-existing conditions, your smoking status and answer all questions honestly.
There are serious ramifications when misrepresenting your answers to questions on an insurance application. If you did not fully disclose your medical history, the company may deny your claim and refuse to pay a death benefit.
Be informed about your policy and the company issuing it. Not all insurers are the same, and will analyse your situation differently, there is a big difference in price and coverage out there.
You want to make sure you choose a company you can rely on to be around for as long as you’ll need coverage. That’s why it’s important that you compare similar policies from different companies to find which one is likely to give you the best value for your money.
Even if you already have a life policy , it won’t hurt to check out the new rates even if you are a little bit older. You never know what the best premium will be unless you shop around.
Generally, the policies we compare come with entry ages of 11 – 75 years old, depending on your chosen insurer and premium structure (stepped or level). However, this may differ from insurer to insurer. It’s important that you always consult the product disclosure statements (PDS) of any given policy.
Keep in mind, the decision to take out life insurance is more about the stage in life you’ve reached, than simply your age.
The policies we compare generally come with an expiry age of 100. However, please consult the PDS before making a decision.
Life Insurance provides cover to your loved ones in the worst case scenario of your death. However, it’s also important to consider how you’ll support your loved ones should you be alive and unable to work due to illness or injury.
You might be interested to read through some of the below links, helping you navigate the different types of policies and their appropriateness at this stage of your life.
Easily find cheap life insurance in Australia by comparing quotes online. Price, benefits & features side-by-side. NO medical exams or blood tests required.
Life insurance is available and affordable for smokers. We compare 12 leading insurers and can work with them to find you an affordable rate!
A Product Disclosure Statement contains vital information about what a life insurance policy covers, excludes and how to claim. Download your chosen PDS here.
NEOS life insurance gives new customers 7.5% off their lump sum premiums when meeting these 3 criteria. Find out if you qualify & how to get more discounts.
We help you decide between joint vs single life insurance for couples depending on the stage of your relationship; newly married, growing family or retired.
Questions & Responses
Need quotes for life, Income and trauma
CAll me on 0400*****4
Hi Charlie
I have booked one of our specialists to call you first thing in the morning.
Cheers
Russell
I am 53 years old, in great health, work as a tennis coach. I am currently with Mercer for death and disability and it is extremely expensive. Can you tell me the best monthly payment on my current death and disability amount of $350,000
Hi Peter
There are a few other variables we need for the quote. However here is a quote for a 53 year old non-smoker based in NSW, for $350,000 life combined with Any Occupation Total and permanent disablement cover paid through your superfund (any super fund). $2,736 / year or $244.95 / month based on the above.
Please note if you would like a detailed comparison quote based on your exact details please reach out to the team on 1300 135 205. We also have a Lowest Price Guarantee.
Hi,
I'm interested in life insurance cover. I understand it covers in the event of my death , but it says it also covers in the event of a terminal illness diagnosis. Which are these illnesses and how does it differ to TPD & Trauma? What are the differences in costs and why?
Thanks in advance.
Regards
Costa
Hi Costa
Yes, having terminal illness covered in a life insurance policy is fairly standard these days. While the terms and conditions differ according to the relevant policy, generally policies will pay the life cover lump sum benefit in advance if you are diagnosed by two independent doctors who confirm that you will pass away in under 12 months. Therefore it would be very unlikely that you would survive past this point. This definition generally covers all medical conditions that give rise to the terminal illness, but here again you would need to check the relevant PDS.
TPD and trauma cover are different in a sense as these provide a lump sum on the general proviso that you will survive. With TPD cover it pays a lump sum on you being made totally and permanently disabled whereas with trauma insurance it pays a lump sum on the diagnosis of a critical illness as defined in the policy. You can see a detailed comparison in our TPD vs Trauma Insurance guide. If you have any further questions please feel free to reach out to us on 1300135205.
Hi I am an Australian Citizen but currently reside overseas can I still be covered under the policy?
Hi Anthony
The policies we offer provide worldwide cover 24/7 cover, however in saying that they may restrict the policy if at the time of application you are planning on visiting or residing in a high risk country.
If you have a current policy in place I am happy for one of the team to confirm if this is the case for your particular policy or if you are currently residing overseas and need cover please contact us.
I have a life insurance policy with your company, however, I don’t have the policy details available. Can you help me as I need to change details?
Hi Anthony,
I did a quick search and it doesn’t look like you are a customer of ours, however, I might be mistaken.
If you would be so kind as to call us on 1300 135 205 and provide us with your policy number or phone number, we can double check and make sure.
Thank you.
I have AMP insurance cover which costs me roughly $2000 a year. I was informed recently that it is unlikely that it covers major illnesses like cancer. Is this true?
Hi Mick
Thanks for your question.
Please be aware that there is a lot of misconception on what or will or will not be covered. To help you with your query we will need a bit more information. For example, what cover type do you have with AMP: Life cover, trauma insurance, TPD or income protection.
Your cover type generally determines what is what is not covered. AMP Elevate Trauma Insurance, for example, pays out a lump sum amount if you suffer one of the serious illnesses or injuries as defined in their product disclosure statement (PDS).
Life insurance from AMP, on the other hand, pays out a lump sum in the event of your death or diagnosis of a terminal illness, which a medical practitioner has certified will likely result in your death within 12 months.
If you need some help navigating the ins and out of your insurance policy, please feel free to reach out by filling in the quote form above or calling us on 1300 135 205.
I would like a quote on a level premium, for a one million dollars life insurance policy.
Hello John.
Thanks for reaching out.
Although you have not specified your age or the state you live in, the below shows the 5 cheapest level premium options for a $1 million life insurance policy, based on a 35-year-old, non-smoking, male living in NSW as of April 2018.
• TAL Accelerated Protection with Health Sense: $76.11 per month.
• Asteron Life Complete with Healthy Life Option: $80.49 per month.
• AIA Priority Protection Vitality: $81.90 per month.
• Zurich Wealth Protection: $82.05 per month.
• ClearView Life Solutions: $84.95 per month.
For a more detailed quote based on your personal requirements, kindly fill in the form above or give us a call on 1300 135 205.
If I decide to cancel my cover can I get a proportion refunded to me?
Hi Julia,
If you paid your premiums annually, you'll usually get a pro-rata refund. For example, if you cancel your policy after 6 months, you'll generally get 50% of your premiums paid back.
However, if you pay premiums monthly and cancel your life insurance policy after the usual 30-day cooling off period, you will generally not receive a refund because term life insurance policies have no cash-value component.
If you're thinking of cancelling your policy because you want to switch to another insurer, please note that you would want to ensure the new policy is active before you cancel your existing policy.
Hi. My wife applied for additional life cover through her super fund as we are building a new house and have an 8-year-old son.
She only has the standard cover of around 150k. She applied for an additional 250K but was rejected because of her mental health history, which is successfully managed by her GP.
I feel that her only way of getting additional death cover is to open a new super fund with the additional standard cover. Is this her only option?
Regards Wayne
Hi Wayne. Thanks for reaching out.
Rest assured, your wife definitely has more options. There are 3 main ways you can buy life insurance:
1. Retail: Buying life insurance through a broker or comparison website, like Life Insurance Direct.
2. Direct: Purchasing death cover straight from the insurer.
3. Group: Life insurance through your superannuation or employer.
Regrading life insurance being declined because of your wife’s metal health history, please know that each insurer has different underwriting guidelines. While one may decline or exclude cover, another might offer standard rates or request that she pay a higher premium.
To find the right cover at the best price, it’s always wise to shop around and compare policies from a variety of insurance companies. Please fill in the quote form above and we’ll compare some of Australia’s leading life insurance companies to help your wife find what she’s looking for.
If you prefer to talk with a specialist right away, kindly give us a call on 1300 135 205.
What happens when you outlive your term life insurance? Do you get money back? I've been paying in for 30 years, it's about to expire and I don't intend to reinsure.
Hello Dee.
Generally, term life insurance policies expire at age 99, depending on your policy type and insurer. Be sure to check your product disclosure statement (PDS) to confirm the expiry date. When your policy expires, you do not get money back as it has no cash-value component. If you have any questions or concerns please give us a call on 1300 135 205.