Today we have the lovely Sally from Health Insurance Comparison back for another guest post on an area that is certainly one I am not an expert in – Life Insurance, including the life insurance benefits and how to cut your premium costs. Hope you find it helpful.
Most of us look to insure our home, our car and maybe our health but have you given any thought to protecting your family income if ill health and death occurs? Life insurance is one of the most overlooked areas of cover but it can be very important for families with dependent children, not least because you probably rely heavily on one or both partners in the household to pay the mortgage and other key living expenses.
How Life Insurance Works
Generally speaking, having life insurance means that your dependents will receive income if the policyholder dies or becomes seriously ill. Unlike health insurance, life insurance is heavily impacted by age and medical history; both of which can have a big impact on the cost of premiums.
The type of financial protection that your family will receive depends on the type of cover that is bought. As well as general life insurance, you can also choose to buy:
Income Protection Insurance – This will cover up to 75 per cent of the policyholder’s income if they are unable to work due to ill health.
Trauma Insurance – This provides a lump sum payment if the policyholder is unable to work due to medical trauma such as heart attack.
Total and Permanent Disability (TPD) Insurance: This provides a lump sum payment if the policyholder becomes disabled and is not able to work as a direct result of this.
The Benefits of Life Insurance
If you or your partner were to die or become seriously ill and not be able to work, would you be able to survive financially? Worrying about how you’ll make ends meet is the last thing you’d need when already grieving.
Unfortunately, you won’t be able to rely on the Australian government to look after your family if one of the main earners in the family were to die. The amount that you could receive is a lot less than you might need, which makes life insurance a necessity for safeguarding your family’s financial future.
Many people automatically assume that there will be enough cover in the life insurance benefits attached to their superannuation fund to take care of everything but this often only amounts to a very basic level of cover. It’s generally recommended that you insure a figure that is equivalent to 10 times the income of the main earner to ensure that there will realistically be enough to support your family with long term household/living expenses, outstanding debt (including mortgage payments) and future expenses (such as school fees).
Life insurance isn’t just for the main earner in the household; it’s worth insuring both partners, even if one is in part-time employment or a stay-at-home parent. This is because they still contribute a lot to the household and would be a big loss if they were no longer able to do so.
Saving Money on Life Insurance Premiums
Life insurance tends to cost more as you get older and if your medical history suggests that you are at greater risk of dying. It’s therefore a good idea to buy life insurance cover while you are younger, especially if your and your partner are both in relatively good health.
Don’t be afraid to shop around for a life insurance policy, just as you would with any other type of insurance. There can be a lot of difference between quotes so it pays to compare your options. Using a comparison website can help to save time and effort, as well as money.
Being in good health will help to reduce life insurance premiums. This includes things such as quitting smoking,maintaining a healthy Body Mass Index (BMI) and taking steps to reduce your blood pressure and cholesterol levels. Smokers and the overweight will pay more for life insurance premiums, as will those with high blood pressure and cholesterol due to the increased risk of developing heart disease and other conditions.
LifeInsuranceComparison.com.au compares all 12 of the major underwritten insurers in Australia. Let us find you a comprehensive policy at a competitive price. Compare insurance providers now and start saving today!