What is Life Insurance?
Life insurance is an insurance policy that will pay benefits in the event death, terminal illness, severe injury or health issues and disability can be covered. Life insurance can pay lump sums to beneficiaries or a portion of your regular income.
What are the different types of Life Insurance?
Life cover will pay benefits to your chosen beneficiaries if you pass away or are diagnosed with a terminal illness. In addition to this you can choose options like total and permanent disability (TPD) insurance if an injury or illness leaves you permanently disabled, trauma insurance for specific issues like a heart attack or organ failure and income protection insurance, which pays a portion of your earnings if injury or illness leaves you temporarily unable to work.
How much cover do I need?
We will help you decide how much cover is right for you. Higher potential payouts mean higher premiums but better cover. You will need to consider the cost of paying outstanding loans, mortgages and credit card debts, how much your children’s living expenses and education will cost, funeral costs and anything else. The right level of cover will be enough for your family or beneficiaries to carry on without you. A YourLife financial advisor will help you find the right number.
How much does life insurance cost?
The cost mostly depends on your level of cover. The more conditions covered and the bigger the benefits, the higher your premiums. Price is also affected by how likely you are to make a claim, which is influenced by your occupation, lifestyle, hobbies, smoking status and similar factors. The higher your risk levels, the higher your premiums.
Will my premiums go up?
Insurance companies typically review risk levels annually and adjust their policies accordingly. They are not allowed to specifically target you with price changes, but can adjust premiums for a group of people that may include you, such as all smokers, or everyone in a certain age group. Your premiums may change at these annual review points, and will usually get more expensive due to the overall risk of health issues getting higher with age. Some insurers, however, may offer premiums that will not change for the entire life of the policy.
What are stepped premiums?
Stepped premiums start low but get much higher as you get older. They are reviewed and raised each year. By the time you hit the higher-risk ages of 50+ your premiums may be very expensive.
What are level premiums?
Level premiums are set at a fixed annual rate when you sign up, adjusted only for inflation. They are more expensive to start with but become much more cost effective later in life. Because the premiums are determined when you sign up it is still very expensive for seniors.
What are hybrid premiums?
Hybrid premiums start out as stepped premiums, but at a certain age turn into level premiums. This is a good option for people looking for a long-term policy, but who cannot afford the initial expense of level premiums. Sometimes hybrid premiums will revert back to stepped premiums at later ages.
Should I get stepped, level or hybrid premiums?
Stepped premiums are good for short-term insurance policies due to their low initial cost but sharp increases. Level premiums are ideal for long-term policies but may be unaffordable at first. Hybrid policies can vary but will always combine some of the benefits and drawbacks of both.
I am self-employed. Can I get Income Protection insurance?
Yes. You may face additional restrictions to compensate for a less-secure income, but you can still purchase life insurance.
Do I need insurance if I already have some with my Super fund?
Yes, although you may not be eligible for some policies or benefits. They will usually gather as much information as they can and then make one of the following decisions:
- They might decide it’s no problem and insure you at standard rates with full cover.
- They might charge extra loading to cover that condition.
- They may specifically exclude that condition from your cover.
- They might decline to insure you at all.
What happens when I need to make a claim?
Should you or your family need to make a claim on your policy, a YourLife adviser will liase with the insurance company in your behalf in order to claim the benefit in what can often be a difficult time.