April 2019 update
A word on life insurance in Australia
Life insurance sold directly through an insurer has been in the news recently for 'poorer claims outcomes'. These situations however, don't represent all life insurance policies and are avoidable in most circumstances. When you buy a policy here's what you should know:
If you apply for a policy that is ‘automatic acceptance’ and there is no medical or lifestyle questionnaire then you should understand that:
- These policies are better designed for people without pre-existing medical conditions.
- 'Riskier' lifestyles e.g heavy drinkers, dangerous occupations are excluded.
- Instead: Go for a policy with a medical/lifestyle questionnaire (e.g. NobleOak) or use an adviser if unsure about exclusions.
Cost of premiums
Most policies have premiums that increase each year you hold the policy (as default).
- These are called stepped premiums.
- Review your cover regularly: As you get older and pay off your debts you might need less cover. You may be able to decrease your cover amount and keep your premium down.
- Consider 'level' premiums: Most policies will also give you the option to take out a premium that stays the same (but starts at a higher cost). These are known as level premiums. This could make sense if you are taking out cover from a younger age.
Note: Level premiums can still increase to keep up with inflation (which you can opt-out from). However, these are much less than increases from a stepped premium.
Life Insurance Publisher for Finder
About the author:
Hi there. I've completed the following qualifications under the Australian Securities and Investments Commission (ASIC) Regulatory Guide 146:
- Tier 1 Life Insurance Certification
- Tier 2 General Insurance Certification
This means when you read anything I've written about life insurance you can be confident that I understand how these products work.