Life is valuable and it’s important you know how to take out the best life insurance to give you and your loved ones the necessary financial support if something goes wrong. The best life insurance is unique to everyone, but it can prove a difficult task to find the one that’s the best fit for you. Find out how to compare your options and choose the best life insurance for your situation.
There are a variety of ways you can work out which life insurance policy is best for you. To find the best life insurance policy that suits your needs, make sure you do the following:
Compare different policies
You should look extensively across an array of insurers. Look at things like key features but also the benefit amounts of these features. You need to make sure that your choice of cover supports your situation and any injury, illness or potentially death scenario which could eventuate and cause financial concern for you or your loved ones.
Determine which policy type is right for you
There are four forms of life insurance cover which you can compare – life cover, trauma insurance, total and permanent disability (TPD) insurance, and income protection insurance. Each type offers financial protection for different situations which may involve being unable to return to work or if the worst happens and you pass away. You’ll need to compare the pros and cons of each type of life insurance and decide which type will provide you with the best cover when you need it the most.
Ensure that your policy coverage is appropriate
Break down your finances and calculate how much cover you will need if a worst-case scenario does eventuate. Make sure your coverage not only meets your potential financial needs, but exceeds them so you will be financially comfortable. Consider things like medical expenses, outstanding debts, living expenses and costs related to your kids if you have them.
Reduce the cost of your premiums
You will need to decide whether you would like to purchase your life insurance cover from an insurer, through a broker or via your super. Buying direct through an insurer will be a quick approval process with minimal medical underwriting. Going through a broker will be a longer approval process but your cover can be better tailored to you. Lastly, purchasing life insurance cover through your super will have your application automatically accepted, but reduce your retirement savings and provide less comprehensive cover. In addition, consider paying for your premium annually to avoid administrative fees when processing more frequent payments.
There are different types of life insurance which can offer you protection in the instance of a range of medical events. Types of life insurance cover include:
Life cover (also known as term life insurance)
Life cover will pay out a lump sum amount to your nominated beneficiaries when you pass away. If you don’t have a nominated beneficiary, your estate or super trustee will make a decision on who receives the money. Terminal illness cover may also come with life cover. This will pay out a lump sum amount if you get diagnosed with a terminal illness and your life expectancy is limited as a result.
In the event of a critical illness or serious injury, trauma insurance will assist you by providing a lump sum amount to support your financial needs. This money can be spent on whatever you please including medical expenses, bills and debt, or ongoing living expenses. Trauma insurance is designed to provide you immediate financial relief and allows you to continue your recovery without concerning about finances.
If you’re totally and permanently disabled and unable to return to work, TPD insurance can support you, your partner, or your family by providing financial support through a lump sum payout. TPD insurance can cover you if you are unable to return to work in the same job you had prior to your disability or if you’re unable to work in a job relevant to your experience or education ever again.
Income protection insurance
Income protection insurance will provide you with cover for up to 85% of your annual income if you are seriously injured or critically ill and can’t return to work. As opposed to a lump sum payment, income protection insurance will be paid fortnightly or monthly and act as a replacement to your regular income to offer you financial relief.
When you’re taking out life insurance, there are a number of things you should compare to get the best policy for you.
Provides financial assistance when it’s needed the most.
When the worst happens and you are out of work with no income, or your partner or family has no financial support, life insurance can help meet the financial needs of you or your loved ones.
Policies are flexible.
Despite the complexities of life insurance, it is very flexible and offers various types of cover which can benefit you in many situations.
Free to choose how to spend your insurance payout.
There are no restrictions on how you choose to spend your benefit amount. It can go towards covering medical expenses, debts or living expenses, or instead it could go towards a holiday for you and your family.
Provide you, your partner or your family with peace of mind.
If the worst does happen and you are critically ill, seriously injured or pass away, life insurance will offer just a little bit of peace of mind knowing that the financial situation doesn’t need to be worried about.
Should you become critically ill or seriously injured, you may need cover to pay for immediate medical expenses. If in a worst-case scenario you pass away, your benefit amount could provide cover for the cost of a funeral.
To find the best life insurance policy for you, make sure you compare your options across a range of insurers. While a policy you may discover early on in your research looks like the perfect fit, you will discover there are better options out there. Savvy is a great place to do this, as our comprehensive comparison tools can help you find the right policy to suit your needs.
To get the best life insurance for you, strive to get the right balance in your cover between your policy’s price and the benefit amount. You don’t want to be paying an unnecessarily expensive premium for a high benefit amount which you don’t need. Similarly, you don’t want to pay a low premium which provides a low benefit amount that doesn’t meet your financial needs if something goes wrong.
As opposed to a stepped premium, a level premium will largely remain at the same price in both the short term and long term. A level premium will only increase if your insurer decides to raise their premium rates. While a level premium will be more expensive when you initially take out life insurance, the long-term costs should be cheaper than taking out an ever-increasing stepped premium.
It’s important you read your policy’s PDS thoroughly so you’re aware of your inclusions and situations where you’ll be excluded from your cover. Life insurance can be complex but reading the PDS can help clarify things for you.