How to Find The Right Life Insurance
Finding the right life insurance needn’t be a major hassle, but you do need to consider a few factors when looking at what kind of policy is the best fit for your needs. First of all, the ‘best’ policy for you may not necessarily be the one that’s cheapest, but rather the one that includes the features that offer you the best protection for the purpose in which you sought cover for in the first place.
Being careful not to underinsure yourself is also important. Having the right amount of insurance that is relative to the likely costs that need to be maintained if you were to die or become seriously ill or disabled should be your primary consideration. Ensuring your family has enough to live on while meeting ongoing costs like a mortgage and day-to-day living expenses can be more important than simply choosing based on premium alone.
Lastly – compare various products to ensure you’re getting the best features in the policy type you seek. Comparethemarket.com.au enables you to compare a range of quotes to allow you to weigh-up your options and select the right life insurance product that fits your unique situation.
What Are the Tax Implications Of Life Insurance?
Most life insurance products are not subject to tax. This means that you generally do not pay tax on your life insurance policy. Accordingly, this also means your life insurance policy is not tax deductible (i.e. you cannot claim it on your individual tax assessment).
The exception to this is when a life insurance policy is written through a superannuation fund, in which case the superannuation fund can claim a tax deduction.
Payout: whether or not the actual payout of a benefit is taxed or not depends on how the benefit is paid; whether it is to a non-dependent, a dependent, or to the deceased estate’s Trustee.
The information listed above is to be used as a guide only. It is recommended that you consult a tax professional for independent advice relating to the particular tax implications of life insurance, as everybody’s situation is unique.
Exclusions and Loading Explained
Sometimes an individual, through the information they disclose in their application process, will be deemed by an insurer as having a higher risk due to a number of factors relating to their health or lifestyle. In such instances, insurance companies may impose an exclusion clause or a loading on the policy as a result.
For instance, if the life insured regularly partakes in a dangerous sport such as (for example) kickboxing, this activity may be excluded on the policy because of its hazardous nature, and therefore cannot be claimed against should the individual die or suffer disability as a result of the activity. Sometimes you may be given the option to choose an increase to your premium (i.e. a loading) to compensate for this increased risk in lieu of an exclusion.
If an applicant has a pre-existing medical condition, it is common for an increase in premium to be applied to the policy due to the additional risk of death as a result of the condition (purely based on statistical probability, and never discrimination). Loadings are usually scaled, starting at a rate of 50% of the original cost of the premium, and increasing at 25% increments thereafter depending on risk. The ratio of the loading that is applied will depend on the level of risk relative to the condition. You may also be required to provide evidence of your condition during your application process.
It may be tempting to omit certain details to save on your premium, however it is imperative that you disclose all pertinent information about your health and lifestyle up front to the insurance company when applying for insurance. Failure to disclose all material facts could result in your claim being declined.
Can I Cover My Children Under My Life Insurance?
Many policies have the option of adding children’s insurance for additional peace of mind, in case your child was to die accidentally or suffer from serious or terminal illness. For more clarification on what options are available and what exactly will be covered, refer to the product disclosure statement (PDS) of the policy you are interested in for more information.
Can I Get Joint Life Insurance?
Joint life insurance (i.e. for couples) can often be available to you depending on which cover you choose. For more information, refer to the product disclosure statement (PDS) of the policy you are considering.
What Factors Affect My Premium?
The premium you are required to pay is determined by a range of factors, depending on the cover you select and the level of cover you choose. Common factors that are considered include: your current health and any pre-existing medical conditions, your age, gender, your occupation, whether or not you smoke, and your lifestyle habits (e.g. higher-risk sports and activities that increase your risk of injury, disablement or death).
Do I Need A Medical Examination Before I Can Take Out A Policy?
In some cases you may be required to have a medical examination or blood tests during your application process. It may depend on factors such as your current health, whether or not you smoke, your age, the type of cover you choose and how much cover you opt for.
Should you need to take a medical examination; the insurer will cover examination-related expenses in most cases.