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Thinking of Buying Life Insurance? – Questions to Ask Yourself Before Deciding

In order to buy a suitable life insurance policy there's a few things to understand first

At its core, life insurance will payout a lump sum to the chosen beneficiaries of a policyholder if they die or are diagnosed with a terminal illness while the policy is active. However, there are many additional options available and a lot of different insurers and policies to choose from. This can make the process of finding the right option a whole lot more complex than it really is.

Don’t get overwhelmed. Instead, try asking a few questions to help you find policies that are good for your situation and rule out the ones that aren’t.

Choose the right level of cover

Your level of cover refers to the total sum of money that you are insured for and will receive in the event of a claim. The higher your sum insured, the higher your premiums. Finding the right amount is therefore a balancing act between too little and too much.

Decide what type of life insurance you need

There are more life insurance options than there used to be, and an increasingly competitive marketplace is leading brands to offers more deals and extras, like packaged trauma insurance and income protection. These are also available individually, but bundling them with life insurance can sometimes be more cost-effective. Simplify the situation by breaking it down into a few key questions.

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Decide which extras you want

You can choose extras in the form of additional built-in policies like those above, but will also have other additions and flexibilities to choose from. These vary between insurers and policies, but can provide useful features. Some are automatically included in most policies while others are not.

  • Advance benefit payment: Many life insurance policies include advance benefit payment of up to $15,000 to cover funeral and other costs that may arise immediately following death.
  • Benefit indexation: Benefit indexation for inflation is an option you can select to have your benefits increase with inflation, usually to a maximum of 5% per year.
  • Adjustment to sum-insured: Not all policies will let you freely adjust the sum insured or other terms of your policy. If you expect changing circumstances in the future and anticipate the need to top up or increase your cover later on, then you may wish to look for this option. At the very least confirm with your insurer whether or not you are able to make adjustments later before signing a policy.
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What won't I be covered for?

Buying direct through an insurance broker

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Receive a quote from these direct insurers

Name Product Maximum cover Maximum Entry Age Minimum Sum Insured Guaranteed Future Insurability Expiry Age Short Description
$15,000,000
69
$0
Yes
99
Get a quote for up to $15 million in life insurance cover. Cover can be tailored to meet your personal needs.
$1,000,000
64
$100,000
No
No expiry age as long as premiums are paid
Get a refund of 10% of the premiums you've paid (in the first 12 months) with The Real Reward™ .
$1,500,000
69
$50,000
Yes
99
Receive a 10% discount on the second person when two applications are submitted at the same time, and both policies are issued.
$1,500,000
65
$3,000
No
80
Flexible cover options to suit your budget. New eligible customers can receive 25,000 Velocity Points. Ends 31 Aug 2018. Min monthly premium and T&Cs apply.
$2,000,000
59
$50,000
Yes
99
Get flexible life insurance up to the sum of $2,000,000.
$1,500,000
69
$0
Yes
99
A simple life insurance product that can offer up to $1,500,000 in a lump sum payment on death or diagnosis of terminal illness.

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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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Andrew Munro

Andrew writes for finder.com, comparing products, writing guides and looking for new ways to help people make smart decisions. He's a fan of insurance, business news and cryptocurrency.

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