Steps to compare life insurance policies and find the right match

How do I choose the right life insurance policy?

It is important that you carefully choose the right life insurance cover to adequately protect your loved ones from financial hardship, should you unexpectedly pass away and leave behind significant financial obligations to cover. Of course life insurance won't bring you back but it can give your family the financial security you would have provided.

Regardless of whether it is just yourself and your partner, or if you have a family of youngsters, you will have a person, or people, who are dependent on you financially. It is a sad fact that many families have experienced great hardship after the main breadwinner has passed away and left significant debt for their family to manage. This could mean the family home having to be sold along with the car or your spouse having to take on extra work to manage the ongoing living expenses. Nobody wants to leave a legacy such as this, but it does happen all too frequently. There is one way it can be avoided and that is to ensure you have sufficient life insurance.

Steps to compare policies you find

The purchase of adequate life insurance need not be as big a hassle as many people think it is. One key reason for Australia's current underinsurance crisis is that people simply feel overwhelmed and confused by the different types of cover available and what they actually need to consider to give their family adequate cover. This article will offer some key steps to help you determine an adequate level of cover to protect you and your family.

Know what you need your life insurance cover for

If you are single, the cover you need will be sufficient to pay your bills, any outstanding mortgage debt, personal debt and coverage for your funeral costs. Term life insurance provides coverage for a pre-determined amount of time and you can choose the period of coverage that suits your situation and budget.

If you are married and have children, you will need extra cover and at this point of time, you may have accumulated larger debts, either short-term or long-term. If something was to happen to you and you are the main income earner of the family, you will need life insurance coverage that will be sufficient to meet your family's financial commitments. This is also best obtained with a term insurance.

Some common expenses that life insurance can help cover include;

  • Mortgage debt
  • Other personal debt - car loan, personal loan
  • Legal expenses that may arise following death
  • Funeral expenses
  • Education expenses
  • Home duties that policyholder managed
  • Everyday living expenses - food, clothing, transport, maintenance, entertainment

Consider other types of cover

Many providers will allow you to bundle other types of cover to your life insurance for an additional premium loading. This ability to tailor your cover can mean that you have adequate "living insurance" for events where you may be forced out of work either temporarily or permanently. Other types of cover to consider bundling to your life insurance policy include;

  • Trauma insurance: Trauma insurance will provide a lump sum benefit payment if the policyholder suffers a medical condition covered under their policy. Some providers will offer cover for up to 50 different conditions including stroke, cancer or heart attack. The lump sum benefit can be used as the policyholder wishes, however it is generally used to cover costs of medical treatment and ongoing living costs as they are forced out of work.
  • TPD insurance: TPD insurance provides a lump sum or ongoing benefit if the insured suffers partial or total disablement and are unable to work to their full capacity or ever again. Each insurer will have different definitions for disablement so it is crucial that applicants are clear on when they will actually be eligible to claim.
  • Income protection insurance: Income protection is generally purchased separately to life cover and provides an ongoing benefit of 75% of the insureds income if they are not able to work as a result of illness or injury. Income cover can offer a range of additional benefits to cover rehabilitation and nursing costs to ensure recovery is as swift as possible. Some policies will provide more than 75% of the insureds income if this additional amount is contributed to their superannuation.

If you are considering other types of insurance it is worth looking into the buy back feature. In most cases, if a benefit is paid for Trauma or TPD, the sum-insured for the life cover will be reduced by what is paid for the other type of cover. Buy back allows the policyholder to repurchase this amount of cover after a defined period of time to ensure they still have sufficient life cover in place.

Make regular checks on your life insurance policy to ensure it remains appropriate

You will need to review your life insurance regularly in order to make any alterations than may be needed following different life stages. Some typical events that may lead you to reassess the amount of cover you have in place include;

  • Upgrade to a new home
  • Change in occupation
  • Birth of new child
  • Death of beneficiary
  • Remarriage

Always look on your life insurance premiums as being a fixed expense in your budget that is not negotiable

Never consider your life insurance is an item that you can get rid off when money becomes tight because you believe you can take it out again when your cash flow improves. It will always be more expensive the older you get and you may also undergo some health problems as you age that may make insurance harder for you to obtain at the standard premium price. You wouldn't drop your house insurance or motor car insurance to free up your household income, so why should you even consider dropping your life insurance cover?

Consult and insurance consultant to help you find adequate cover

Speaking with an insurance adviser can help you find an insurance solution that closely matches your cover requirements. Insurance advisers can use their knowledge of the insurance market to;

  • Help you compare multiple policy options at once
  • Determine an adequate amount of cover
  • Design your policy to include any other suitable cover options
  • Find providers that will offer cover if you are potentially high risk
  • Hunt out premium discounts

Make an enquiry to compare life cover quotes

Compare Life Insurance or Income Protection Quotes

Please enter your full name
Please enter a valid email address
It's important to give us a valid phone number
Gender
Smoker
Date of Birth
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.
By submitting this form, you agree to the finder.com.au privacy policy
Compare Quotes

Compare Life insurance quotes from these direct brands

Details Features
Life Insurance
Life Insurance
Choice of cover options and flexible premiums to suit budget. No lock-in contracts and fast application.
  • Benefit payment of up to $1,500,000
  • Cover for applicants up to age of 65
  • 30 day cooling-off period
Go to site More info
Term Life Insurance
Term Life Insurance
Receive up to $1,500,000 in life cover and pay nothing for the first month. 10% Multi-life discount available.
  • Lump sum cover from $50,000 - $1,500,000
  • $15,000 Cash advance benefit
  • 10% Multi-life discount
Go to site More info
Term Life Insurance
Term Life Insurance
Save 25% on NobleOak life insurance and pay no premium for your first month.
  • Benefit of up to $1,500,000
  • Available for applicants up to 69 years old
  • 21 day cooling off period
Go to site More info
Was this content helpful to you? No  Yes

Related Posts

Ask a Question

You are about to post a question on finder.com.au

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At finder.com.au we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the finder.com.au privacy policy, receive follow up emails related to finder.com.au and to create a user account where further replies to your questions will be sent.

Ask a question
feedback