Choosing between price over the value when it comes to life insurance

Published on June 14th, 2020
  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.
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Life insurance price vs value

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Having a life insurance policy is something that you may consider taking out at some stage of your life. The number one advice you will probably hear is that you need to compare your options. Recent data reveals that many Aussies are letting the price of their policy become the deciding factor which has its pros and cons. Here is what you need to know when choosing between the price or the value of a policy.

Price dominating most Aussies decision on life insurance

Finding the best policy suitable for your situation is vital. One thing that you will quickly find out is that not all insurers or policies are created the same. Some will offer you more value than the other which is why it is important to compare.

A recent survey by Noble Oak revealed that as many as 80.5% of Aussies cited the costs of premiums being an important factor that will let them decide if they took out a life insurance policy or not. Checking the cost of premiums can come in handy when finding out if you will be able to afford your life insurance policy over time. However, this can cause many Aussies to fall into the common trap of price of value. Just because a policy is cheaper doesn’t necessarily mean that you will be getting the best value for money.

The survey further revealed that many Aussies don’t buy life insurance due to the perception of high costs. 44.7% of people stated the cost as the main reason why they do not have life insurance. This is why it is vital to compare your options and check the policy features to see if it is worth taking out or cancelling altogether.

Checking your policy features for value

Making a decision based on the price of a policy can cause you to miss out on valuable features that will be worth your while when the policy is paid out. 57.1% of Aussies said that they compared policy features to see if they were getting the best value for their money, while 52.9 checked the claims reputation of an insurer to see if it is something that they will take out.

Looking beyond the price tag and reading the product disclosure statement can show you if you will be making the best investment for you and your loved ones. Other factors to consider when comparing is:

  • Your ability to renew and upgrade your policy according to your life stage which only 18.2% of Aussies who were surveyed currently do.
  • If the premiums will be affordable.
  • Your insurers' service will also determine whether the process of getting life insurance is a smooth one or one that will prove to be stressful when it is time to place a claim.

Always keep in mind that life insurance is more than the price, but something that can give you and your loved one's peace of mind knowing that you are financially protected. Speaking to a broker or an insurer can let you know what options are available to you and will be most beneficial towards your situation. The onus is on you to compare.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

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