Why is it Important to be Covered with Life Insurance?
Life insurance is of course all about your life. It is about ensuring that you have the same quality of life even when accidents or loss happen. Although, the loss of a loved one cannot be replaced, having life insurance can ease the financial burden, such as loan repayments and funeral expenses that the family would otherwise carry.
Life insurance, especially one with comprehensive cover, could make a huge difference in maintaining your lifestyle and helping you adjust with whatever changes the uncertainties of life can bring.
However, it is not always as easy to find a life insurance policy which would complement your needs and cover all possible risks within your budget range. Thus, the quest for the perfect life insurance policy may remain a myth.
So how do you overcome these obstacles? It is by facing the myths head-on and having a full understanding of the basics of life insurance.
Understanding the Basics of Life Insurance
When building a house, it’s very important to give careful thought to the foundation. Having a solid foundation means a strong a stable structure. So it is when investing in a new business endeavour, understanding the ins and outs of the business will help you devise strategies that work and plans that are workable. In short, the basics are very important.
When thinking about buying insurance, you must also give careful thoughts to the factors or features which serve as the foundation of the policy you are going to buy.
Understanding the basics helps you make a good solid foundation for your life insurance policy saving you trouble that could arise in the future due to negligence of the foundations.
Below are the basic factors that you need to give careful consideration to when buying life insurance.
Premiums are one of the major factors that would come into play when you consider buying life insurance. There are basically two types of premium insurance policies have – stepped and level.
Stepped premium lets you pay a low initial payment but with premiums which increase as your age increases. Level premium, on the other hand, has a higher initial payment but with premiums which stays the same throughout the whole policy.
When shopping around for life insurance, you might come to the conclusion that most of them are the same. Though this is generally true when you are thinking of the basic cover, each insurance policy has certain features, exclusions and add-ons which differ from provider to provider.
Some covers include accident cover, trauma, buyback options, and more. The buyback option is a feature which allows you to re-purchase a certain cover after a full benefit has been paid to you.
The level of cover you have may depend on what your circumstances are. It would also depend on the risks you are exposed to and the circumstances you have, such as whether you have dependents or not, and if you have debts and mortgages to pay. Your life insurance cover should be able to pay off your financial obligations while providing enough cover for your family. Do not be tempted to buy any policy which you do not necessarily need.
Plan Your Cover
Even before taking to a financial adviser, you should have a clear list which type of features or options should be included in the plan or policy you choose. Calculate your risks and choose which type of cover you need most in your present situation. By doing so, you will be spared the temptation to purchase unnecessary features.
The financial adviser is just there to help you fine tune the choices you have made.
Other Factors Affecting Your Premiums
Aside from the above mentioned, being able to find the best insurance depends on the following factors, such as age and gender, health, and smoking habits.
Age and Gender
Two factors that have a huge effect in the premiums you have to pay are your age and gender. Logically the younger you are, the lower your premiums are because you have fewer health risks when you are younger.
Moreover, men have a higher premium than women because they are more likely to be involved in riskier work, and because men are more inclined to such adventurous endeavours which could put them at a much greater risk.
Smokers are often going to pay three times as much on insurance premiums than non-smokers. This is self-explanatory since smokers are going to be exposed to much bigger health risks than those people who do not smoke.
If you are healthy you might scoff at the idea of getting life insurance. However, you might be surprised to know that insurance providers give big discounts and offer extra perks to those who are healthy. Do not wait for any serious illness to strike you before you get insured. Those who get insurance when they are at the best of health get the better deals.
What to look for with income protection deals
Of course, when you are considering taking out income protection cover you need to ensure that you find cover that is not only suited to your needs but also fits in with your budget. It is important that you keep up with premium payments on your cover to ensure that you do not invalidate it but at the same time you should make sure that the level of cover is adequate enough to provide you with the peace of mind and protection that you need.
Some of the things you need to consider when you are looking at various income protection deals include:
- What is the maximum level of coverage that the provider will allow you to opt for? This is usually up to 75 percent of your regular wage, although it can vary based on the provider and on a number of other factors
- What are the features and benefits of the income protection plan? Some income protection deals come with a range of inclusive and optional extras, which may prove invaluable and which could end up providing you with far greater value for money
- How much does the cover cost? You need to make sure that you choose a plan that you can maintain premium payments on – and bear in mind that the cost of cover can vary quite widely from one provider to another
Steps to Find Income Protection Deals
You will find that many income protection deals that are around today come with a variety of options extras, which can be very useful if you think that you will need them. It is often much cheaper to opt for income protection deals that come with optional add-ons such as critical illness cover or disability cover compared to taking all of these different types of protection out as individual plans.
However, whilst we would all like to have complete peace of mind with as much protection as we can get against unforeseen possibilities, most of us have to take our budget into account. If you find that the cost of income protection deals that come with these extras is too high then look at something that is more basic. Whilst the protection level may not be as great, at least you have the peace of mind that you do have some level of protection and that you can comfortably keep up with premium payments.
Compare Income Protection Deals from Australian Insurers
Another thing that you should bear in mind if you want to find suitable and affordable income protection cover is that the cost and the coverage can vary between different life insurance deals and providers. It is therefore vital that you compare a range of life insurance deals before you make any decision of commitment, as you could get far greater value for money and a much higher level of protection by doing this. You can compare income protection deals with speed and ease using the Internet, so you won't even have to dedicate a huge amount of time in order to try and get the right cover at the right price.