7 Questions to Ask About Life Insurance
Life insurance has been in the headlines a lot lately from companies charging thousands of deceased customers for policies to pressure selling cover to persons of limited mental capacity. If the headlines have you questioning your life insurance, we say it’s a good thing because when it comes to life insurance, you shouldn’t buy life insurance and then forget about it.
Here are 7 simple questions to ask about your life insurance policy:
- Are you paying for multiple life insurance policies?
If you’re thinking, how can someone have multiple life insurance policies, it’s simple: you purchase a policy that you chose AND you have a default insurance policy through your superannuation fund. The Productivity Commission states that thousands of customers are paying for more than one life insurance policy without realising it.
- Does your premium costs align with your cover?
The old adage of “the devil is in the in details” holds some truth. here The detail(s) of the product is what is important, not the cost. Just because you are paying more doesn’t mean you have ample coverage.
- What is covered?
Take the time to read the fine print (or ask) what your premium covers in regards to events or illnesses, does it cover the ongoing cost, and how does or will your medical history affect your policy.
- What is excluded?
If you have default life insurance through your superannuation, it may have more exclusions that could affect you at claim time. Does it cover pre-existing medical conditions?
Though the meme from Parks and Recreation above was a poke at US health insurance companies, it is sadly not a far off experience for some life insurance policy holders. Ask for a written explanation and provide your insurer in detail any medical conditions that you think may hinder your claim at payout time.
- What do income protection, trauma insurance cover, and TPD cover?
Income protection replaces some of your income for a period of time if you are unable to work due to injury or sickness. Check if you are covered under “own” or “any” occupation as your claim could be turned down if you are not able to return to your own job but could work another job.
Trauma insurance provides a lump sum upon diagnosis of an illness that has significant impact on the policy holder’s life. There are set definitions to what is covered so ask exactly what is covered.
Total & permanent disability insurance helps cover the cost of rehabilitation, debt repayments and the future cost of living, but similar to income protection, ask your provider if you are covered for “own” or “any” occupation.
- How much life insurance do you need?
ASIC says to work out how much life insurance you need, you should consider how much money your family would:
- need - to pay your mortgage and any other debts, as well as child care, education and living expenses
- receive - from superannuation, shares, savings and existing insurance policies, how much paid leave you have and what type of support your family could provide
The difference between these is the amount of cover you should get.
- Does the insurance default insurance policy meet your needs?
If you have your life insurance through your superannuation fund, it is always good to shop around to the right policy for you.
Also remember to review your policy annually but if you have a set it and forget mindset, at least review it every time your income or personal circumstances change.
Any information contained in this communication is general advice, it does not take account of your individual circumstances or needs.
FiftyUp Club Pty Ltd (ACN 166 905 175) is the promoter of the FiftyUp Life Insurance product and is pleased to work with NobleOak to make this product available to you.
FiftyUp Life Insurance cover is issued by NobleOak Life Limited ABN 85 087 648 708 (AFSL No.247302). Please consider the FiftyUp Life Insurance PDS and NobleOak's Financial Services Guide which set out the terms and conditions for the Life Insurance cover to make sure this cover is right for you.
