A life insurance policy is recommended for many Australians and can be more affordable than people realise. However, there is often a reticence to delve deeper and investigate options. This may be due to the inconvenient truth that the policy will only pay once the holder is deceased or given less than 12 months to live. Some people feel uncomfortable dwelling on the subject for long and many miss out, failing to provide for their loved ones as a result. If you feel the time has come to stop avoiding the subject and find out more about life insurance in Australia, here are some common questions many people ask once they start researching.
Is Life Insurance Worth The Money?
The bottom line is that declaring life insurance to be ‘worth the money’ is impossible given the wide variety of individuals and their circumstances. It is, however, fairly safe to say that anybody with dependants and loved ones to consider would be well-advised to avail themselves of a decent life insurance policy. The old adage about ‘hoping for the best but preparing for the worst’ is appropriate in this case, and procuring a life insurance policy represents the ultimate form of thinking and planning ahead. Besides, the sense of relief in knowing your family will be financially secure in the event of your passing is hard to put a value on and certainly not to be underestimated.
How Often Will Life Insurance Premiums Be Due?
The amount and frequency of your premium payments is something you must discuss with your chosen insurers and will vary from one policy to the next. Generally, it is safe to assume that premiums can be paid monthly, six-monthly, or annually.
What Is Underwriting?
Any insurer will protect themselves by carefully assessing the eligibility of anyone seeking life insurance. Their findings directly affect the premiums required and other elements of the agreement. The following will almost certainly be required and taken into account:
- Occupational risk – Most jobs in Australia are reasonably risk-free and will not affect premiums or terms and conditions. However, individuals working in dangerous industries may experience drastically increased premiums or even refusal to offer life insurance.
- Full medical history and disclosure of any pre-existing conditions — If no pre-existing conditions are declared, you are unlikely to be asked to undergo a medical check
- Hereditary ailments – You must disclose any conditions affecting your wider family.
- Lifestyle – If you engage in ‘dangerous’ activities, your insurers will want to know about it. This includes but is not limited to: taking recreational drugs (including nicotine and alcohol), dangerous hobbies or pastimes, and any other relevant unhealthy behaviours. Failure to disclose any of this information is grounds for the immediate nullification of any life insurance policy.
What Is Indexation & Will I Be Affected By It?
When the fine print of any life insurance policy links it to inflation and the cost of living, this is known as indexation. It is important to know whether your chosen policy is set to rise with other prices as the amount payable might seem sufficient when agreed upon but start to seem less so as time passes.