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What Life Insurance is Best?

 

Choosing the best insurance for you is very important. Without the right type of cover you could be paying more than you need to, putting your family at risk of financial hardship or your policy may not even cover you. Before selecting your insurance you should know what types of insurance are out there and what pit falls you can avoid.

 

Types of Life Insurance

Term Insurance

The only type of life insurance widely available in Australia is term insurance. Term insurance gives you coverage for a specified amount of time (e.g. 30 years) for a specified premium and it doesn’t accumulate cash value. This means that your entire premium goes toward a payout in the event of your death, rather than a portion going toward a savings plan. At the end of the term, if a claim hasn’t been made, the policy holder does not receive any payment.

Term insurance is usually the most affordable type of life insurance. It’s usually the best choice, as savings plans within insurance usually do not produce good returns (if any).

 

Other Types of Life Insurance

Universal Life Insurance, Whole Life Coverage and endowments are types of insurance that are largely unavailable in Australia.

Whole Life coverage does not expire after a term and includes a cash value (savings plan for a portion of your premium). Premiums are also fixed.

Universal coverage also does not expire and includes a cash value, however, the cash account is invested and the interest from these investments is used to fund premiums.

Endowments are policies where the cash value within the policy will eventually become equal to the death benefit at a certain age. If a policy holder survives to endowment age they will receive the cash value from the insurer.

 

Insurance Pit falls

Make Sure You’re Covered

It is important to make sure you purchase the right policy for you. Many insurance policies (particularly bottom rate policies) will have very basic cover and may not reflect your situation. It’s important to find a policy that properly covers the activities and lifestyle you enjoy to ensure your family is looked after.

Don’t Pay Too Much

Do you know how much your family would need were you to pass away? It’s important to think about your income, expenses, dependants, debts and expenses to figure out how much insurance you will need. To calculate the value of life insurance you need see our article: How Much Life Insurance Do I Need?

 

Choosing a Provider

We strongly recommend getting help from a financial advisor before purchasing your life insurance. We can compare a large range of insurance providers and plans to find out what suits you. We can help you avoid common pit falls and go through the fine print for you with an expert eye. Contact us if you would like help.

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Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. 

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