Do you know what your life insurance covers?

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on November 25th, 2021       

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When it comes to life insurance there are two types of people; those who already have a policy and those who don’t. But the one thing that these two types of people can have in common is that they might not know what their policy covers. The last thing you want is to find out what it does and does and doesn’t cover when it comes to placing a claim. Here are the essential things that you need to know when it comes to life insurance.

It is there to financially protect you and your loved ones

The primary basis in which life insurance is built upon is that it is designed to protect you and any independents you might have financially. Some people might think that it is something that you can only have access to once you have passed on, but it also protects you while you are still alive from a situation that could prevent you from going to work and getting a salary. There are various policies that you can choose to help you protect you from life’s unforeseeable events.

You can leave a financially secured future for your loved ones

Although it might seem cruel for insurance companies to play on people’s fears by asking questions along the lines of you being able to protect your loved ones financially when you have passed on, it is still an important one. TAL revealed that over half of Australians who have taken out life insurance through their super have a $100,000 shortfall which can cause trouble in the future. Life insurance makes sure that the people you leave behind will be able to take care of mortgage costs, debt, everyday living expenses, and educational expenses.

Your cover will be based on the type of policy you take out

When you apply for life insurance you will be assessed based on your age, gender, health, and current lifestyle expenses by an underwriter who will then provide you with a quote which they believe will adequately cover your loved ones, also known as beneficiaries, when you are no longer around to do so.

However, if you choose to take out another policy such as income protection, total or permanent disability cover (TDP), or trauma insurance you will be paid a lump sum if you fall ill or sustain an injury that puts you out of work while you are still alive in order to cover your expenses.

You can be covered for a pre-existing medical condition

There is no need to shy away from getting a policy because you have a pre-existing medical condition. There are insurers who offer policy covers for people who have been diagnosed with heart illnesses, cancer and more. Furthermore, it can be tailored to suit your needs so that your loved ones will be able to handle the medical expenses that you need to undergo.

It does have exclusions

When taking out a policy it would be in your best interest to read on what your policy will not cover to avoid spending money on something that will be invalid when it is time for your loved ones to make a claim. A general rule of thumb is that most policies will not pay out if a person’s death was the result of self-inflicted harm, suicide, or death due to war. Your insurer will inform you on other exclusions that your policy will not cov