February 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.
- Instead: Apply for '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.
Note: Level premiums can still increase to keep up with inflation (which you can opt-out from) or changes to an insurers fees. However, these will be smaller increases than a stepped premium.
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