Essential tips to get the most out of your life insurance policy

7 steps to find suitable cover at the right price.

Just like buying anything that would require a considerable amount of investment, buying life insurance needs some careful thought. Here are some of the tips that you would like to keep in mind. These simple rules can never go wrong and would leave you with a good deal.

  1. Find an insurance adviser who deals with a lot of insurance companies.

An insurance adviser who has a lot of companies under his belt can give you more options and a better deal than someone who is exclusively working for a single insurance company.

Life insurance agents and advisers do not dictate how much the insurance policies are, but the companies do. A good adviser would be able to get you a better deal after exploring various options from several insurance companies.

  1. Take your medical exam first thing in the morning.

Having your medical exam before anything else could save you a lot of hassle. The reason – your blood is generally lower in the morning. By taking a medical exam first thing before you have an exercise or have breakfast makes it easier for the person assessing your health to read your medical exam clearly than just second-guessing what is really there.

  1. Ensure that your term policy can be converted later.

A term policy gets you to pay a low initial payment. However, when you have the ability to get more comprehensive cover and go permanent, ensuring now that you can convert your term policy to a permanent later could save you a lot of hassles. For one, it could save you the hassle of getting medical exam when you decide to change your cover.

  1. Review your life insurance policy regularly.

Some insurance companies give regular feedbacks and alerts on improvements and new additions. By regularly checking your policy you would be able to see possible discounts and additions that could benefit you. You could also easily amend any changes like a change in occupation, additional debts, marriage, or the birth of a child. Most insurance companies allows you to increase your cover on such life events without requiring additional medical proof.

  1. Pay off your main debts.

Simply put, life insurance is for the living. It helps the beneficiaries of the insured to have an easy transition after the insured’s death. It also creates an immediate estate. If you have outstanding debts, the benefit your dependents would receive might just be enough to pay them off which defeats the purpose of life insurance – to ensure that your loved ones are taken care of should you die.

  1. Put your policy in trust.

This step ensures you that the benefits paid out on your life insurance policies would not be subjected to inheritance tax. Doing this is absolutely free. All you have to do is fill in a few forms and you’re ready to go. If you are not sure what you will do, ask your life insurance provider to help you with the process.

  1. Secure a good life insurance deal.

Shop around. You can visit the websites of different insurance providers and get free and instant quotes. This would give you an idea how much your premiums would be. And when you find a good one, don’t let the opportunity pass – the more you delay, the more expensive it can get. Why? Life insurance gets more expensive as you get older.

5 traps to avoid when finding cover

  1. Don’t go after cheap life insurance.

By cheap, it means scrimping your life insurance when you cannot afford the premiums. Instead of buying less which could virtually leave nothing to your beneficiaries, buy life insurance that has shorter cover but has enough coverage. Buy a term policy which could has a lower initial payment which could be converted to permanent later.

  1. Don’t withhold any beneficial information.

By withholding information, you are allowing your insurance company to withhold a claim you will make later. Instead, bore them to death with very detailed answers. By being too wordy, you would have your underwriter give you the best possible rate there is.

  1. Don’t mix insurance and investment.

What is the reason you bought life insurance? That is to provide something for your family when you die. Although there are tempting opportunities of using your insurance on investments, bear in mind that the risk of losing it is high as well. Instead separate your insurance from your investments and learn to diversify.

  1. Don’t smoke.

Smoking makes you pay higher premiums, since the health risks are higher than those who are non-smokers. So if you want to save more, do not smoke.

  1. Don’t forget to include future costs.

When you are calculating your insurance, don’t forget to factor future costs such as education, home improvement costs, and more. However, do not overestimate to avoid higher premiums.

When might it be time for me to review my policy?

There are a number of changes that may take place in your life and many of these changes could warrant a change in your life insurance cover. Conducting a regular review of your life insurance plan will help to ensure that you do not miss anything important – even if you do not feel that any major changes have taken place in your life, it is still worth reviewing your life insurance cover just to be on the safe side.

Some of the changes that may take place in your life and which could result in changes needing to be made to your cover include:

  • Getting married or moving in with a partner
  • Starting a family or adding to your family
  • Deaths that take place in the family
  • Changes in relationships within the family
  • Any events that might change the amount that your loved ones would need for financial security in the event of your death such as a new house or car
  • A change in your income or job, which may result in your loved ones becoming used to a higher level of income/better lifestyle
  • A change to the financial commitments that you have as a family such as credit cards or educational costs

Choosing life insurance for your beneficiary

The most important feature in any life insurance policy is the beneficiary clause because it centres on the transfer of wealth to your spouse and children. There are a lot of different kinds of beneficiaries though.

  • Multiple beneficiaries can be your children, and you can indicate the amount of money given to each one
  • Contingent beneficiary is underneath the primary beneficiary in case the beneficiary dies before they can receive your assets
  • Minor beneficiary will have to have a guardian or trustee to administer the insurance proceeds after your death
  • Revocable beneficiary can be edited at any time during the policy
  • Irrevocable beneficiary cannot change unless they sign off on it

Review Policy Options Suitable for Your Situation

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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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Compare Life insurance quotes from these direct brands

Name Product Maximum cover Maximum Entry Age Minimum Sum Insured Guaranteed Future Insurability Expiry Age Short Description
No expiry age as long as premiums are paid
First month FREE when you take out Real Family Life Cover. Available for a limited time (T&Cs apply).
Receive a 10% discount on the second person when two applications are submitted at the same time, and both policies are issued.
Choice of cover options and flexible premiums to suit your budget. No lock-in contracts and fast application.

Tailored life insurance so you know what you're covered for upfront. Take out a policy and get a $100 bonus gift after holding cover for 2 months. T&Cs apply. Ends 31 March 2019.
No expiry age as long as premiums are paid
Cover up to $1.5 million with Guardian Life Insurance.
Protect your family with up to $15 million in cover. Plus, get your first month free. T&C's apply.
No expiry age as long as premiums are paid
Receive one month's premiums off every year if you pay annually upfront. T’s and C’s apply.

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Maurice Thach

An insurance researcher and writer for who loves finding an answer to the question "Am I covered for ________?" Maurice has also completed a Tier 1 Life Insurance and a Tier 2 General Insurance Certification under ASIC's Regulatory Guide 146. This means he can confidently provide general advice for life insurance and non-life insurance products.

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