9 life insurance features to consider

Comparing life insurance? Be on the look out for these words in a policy.

When it comes to insuring your life it makes sense to include a lot of detail in a policy. This side-effect of this however means finding the right cover can be complicated. What should you look out for? We've narrowed down the features that you should consider when comparing.

1. Terminal illness benefit

If you’re diagnosed with a terminal illness, you may be able to access needed funds from the terminal illness benefit included in your life insurance. Some insurers consider having less than 12 months to live as a terminal illness.

Why look for this feature?

Not only does this benefit cover you in the case of immediate death, but it also ensures you can get access to necessary funds during your illness.

2. Advance funeral payment benefit

This is a payment to your family members to help cover immediate expenses, such as funeral and legal expenses. This can sometimes be up to $30,000 depending on the insurer.

Why look for this feature?

The payment that your family receives after your death may take some time to be processed. An advance funeral benefit pays part of the benefit sooner. Usually, your insurer will pay this once your family has submitted a death certificate, a doctor’s report, a claim form and any other required evidence.

3. Guaranteed future insurability or future increases benefit

This benefit gives you the option to increase your life insurance benefit without a medical assessment. You can typically only use a future increases benefit when a significant life event occurs, such as marriage or having children.

Why look for this feature?

It’s preferable to avoid another medical exam during the term of your life insurance cover. However, once you have a child, the amount of cover you need will likely increase. This is where future insurability comes in.

4. Accommodation benefits

In the event of a serious illness or injury, this provides daily compensation if you are 100km away from your home. Your insurer will reimburse your family members for the cost of relocating to look after you.

Why look for this feature?

Your family members can still be with you during a tough time – even if distance is a factor.

5. Automatic inflation increases

With automatic inflation increases, the amount you have insured keeps up with inflation or with the Consumer Price Index.

Why look for this feature?

In five years, the amount you had originally taken out will be worth less (relative to the general cost of everything). Note: Your premiums will also increase with inflation with this feature.

6. Premium Freeze

You can suspend your premiums (and cover) for a short amount of time if you are struggling financially.

Why look for this feature?

If you stop paying for premiums on life insurance, your insurer will cancel your cover. A premium freeze caters to those times where you genuinely can’t make a payment.

7. Cooling-off period

A cooling-off period is the amount of time you have to change your mind about a policy and back out with a full refund. This period typically lasts for the first 30 days after you receive your policy documents. Note: Australian Consumer Law requires a minimum of 14 days.

Why look for this feature?

Your circumstances may change or you might discover that a policy is not actually right for you.

8. Financial planning benefit

This benefit pays the cost of helping your family devise a financial plan when you’re no longer living.

Why look for this feature?

If you are the main person who handles the finances in the family, you are leaving behind a huge responsibility if you pass away. A financial planner can help manage both your loss in income as well as the lump sum your family gets from your life insurance policy. This will help your family with its long term goals, such as paying off the home.

9. Waiver of premiums

If you become disabled or terminally ill, then your insurer will waive your premiums.

Why look for this feature?

During an already difficult time, this is an important feature as you might find yourself out of a job and unable to earn any income. Taking these nine features into account when shopping around for life insurance will help ensure you get the proper insurance to cover you and your family.

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Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount. Calculator
Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
Provides a lump sum payment if you suffer a serious medical condition. Cover can be taken out for 40-60 medical conditions depending on the policy you choose.
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