Unfortunately, when illness or injury disrupt your life, your financial obligations don’t just disappear. Life insurance is designed to safeguard you and your loved ones from financial hardship if you:
If you experience one of these scenarios and have a life insurance policy, you can receive a lump sum payment to help towards your mortgage, kid’s school fees, living expenses or whatever else you deem most important.
To figure out how much life insurance cover you may need, consider using our life insurance calculator.
When you take out life insurance, you will get to choose both the type of insurance and cover amount. You will have to pay a life insurance premium that is influenced by several factors, including your insurance type and cover amount as well as pre-existing medical conditions. Your eligibility for a life insurance policy may depend on your occupation, lifestyle and medical history. For example, if you work a high-risk job, live a dangerous lifestyle or are predisposed to certain medical conditions, you may have to pay an additional loading – if you’re even eligible for cover at all.
When your claim is approved, your insurance provider will pay you or your beneficiaries a lump sum amount that you can use however you think is best. Many people choose to use their payments to help their family maintain a good quality of life when they can no longer provide for them. This could mean paying for major life events like weddings, funerals or future children, or day to day expenses like school fees and recreational costs. If you’re unsure how best to spend your payout, consider seeking advice from a financial planner.
To fully understand the terms, conditions and exclusions of your life insurance policy, refer to the relevant Product Disclosure Statement (PDS) and any other policy documents.
Whether you need life insurance or not is a personal decision you have to make for yourself depending on your personal circumstances. However, here are a few things to ask yourself when deciding if life insurance is a good idea for you:
If the answer to these questions is no, you might want to consider looking into a life insurance policy. This is only general advice; consider talking to a financial adviser before deciding to take out life insurance.
The exact amount of cover that you need will depend on your personal circumstances. If you have financial obligations such as credit card debt, car repayments or a mortgage, you may want to consider taking out a higher level of insurance to cover these expenses. To get a good idea of the amount of cover you might want to take out, try our life insurance calculator.
The amount you pay for life insurance will depend on several factors. The type of cover and cover amount that you choose will most likely have the biggest impact on your premiums. However, you may also be subject to life insurance loadings, which are an additional fee you might have to pay if you’re deemed as high risk by your insurer. This could be because of a family history of certain medical conditions or if you have a high-risk lifestyle or occupation. The full list of loadings and exclusions can be found in your Product Disclosure Statement (PDS); be sure to read this thoroughly before taking out any policy.
Life insurance policies can come with either stepped or level premiums:
While many insurers will cover you if you have a pre-existing condition, there is a good chance you will have to pay an additional loading on top of your premiums. Alternatively, some insurers may apply exclusions to your policy that prevent you from claiming benefits relating to your condition.
For example, if you have a heart condition, you may not be covered for heart attacks, but you would be for other conditions like cancer or work accidents.
With pre-existing conditions, it’s important that you’re always honest with your insurer. While having a pre-existing condition can increase your premiums, not disclosing your medical condition can be even more costly in the long-run, as your claim may be denied if your insurer finds out you weren’t honest about your medical history.