5 life insurance traps to avoid that can cost you

Last updated on November 25th, 2021 at 03:00 pm by Bill Tsouvalas

Taking out the right type of life insurance policy that comes with features that are tailor-made to suit your personal circumstances isn’t as easy as it may sound. That is why it is vital that you take your time when it comes to choosing various life insurance policy. Here are five traps that too avoid when taking out a policy.

Not comparing rates

Making the mistake of choosing the first policy that sounds like it has a good rate can be a trap that can end up costing many policy owners. With thousands of policies to choose from on the life insurance market, it is vital that you compare rates and features that come with the various policies to ensure that you will be adequately covered. You can speak to an insurer or a broker who will be able to help you find a policy that will be suitable for your circumstances.

Looking at the price tag instead of its features

Just because a life insurance policy is expensive doesn’t mean that it is affordable. Even if you are planning to bag yourself the cheapest policy on the market, it will be a waste of your funds if you do not check the features. Life insurance is all about proving a secure financial future. According to Real Insurance Family Protection Survey, a quarter of Australians were not sure that the policy they have will adequately cover, while 38% had no insurance. Always keep in mind to compare the policies features.

Assuming you will be covered for everything

To avoid disappointment when it is time for you or your loved ones to make a claim on your policy, it is vital that you read the Product Disclosure Statement. This is a detailed part of your policy that lists what will be covered and the exclusions that can disqualify you from making a claim on your policy. Ensure that the policy has features and benefits that match your circumstances, especially if you have a pre-existing medical condition.

Delaying the process of getting a policy

The myth that life insurance is expensive and that it is something that can be put off for when you are older ends up costing many Australians later. According to research by AFA, 81% of Australians thought life insurance was pricey while 61% overestimated the cost. Waiting till you are much older to get a policy means you will attract higher premiums. Getting life insurance can give you access to a policy that has lower premiums because you are generally healthier.

Not considering the various policies

There is more than one type of life insurance policy that you can choose from such as life insurance, TDP, income protection, and trauma insurance. However, not looking into which policy will be suitable for you along with the coverage it offers you can cost you. You can consider slowly building your policies if you are looking for something that is affordable. For example, taking out a life insurance policy along with income protection can ensure that you and your loved ones are protected. It is vital that you put in the research to find a policy that will be suitable for you.