Life insurance is a type of cover that pays a lump sum on the event of your death to a beneficiary or beneficiaries nominated by you. It offers peace of mind that your loved ones will be financially secure when you are no longer around and, therefore, it’s important to avoid the following mistakes when you are choosing a policy.
It’s important to understand that a life insurance policy is what’s known as a ‘term’ policy. Therefore, it is only in effect for a specific period of time. Once the policy has expired you will need to purchase a new policy. If your health has deteriorated during that time then you may find it difficult to obtain another policy.
Don’t just buy a policy because it is cheap. You need to ensure the cover meets your requirements. You may think that $25 a month is cheap but if the policy you are paying for isn’t what you need then you are just wasting your money. And likewise, buying your policy from a little known or less than 100 percent reputable insurance company; look for a provider with at least an A rating.
Be extremely wary of companies who do not underwrite their products. That’s just asking for trouble. These policies can often cost up to double of an equivalent level of cover which is underwritten and a lot of them have exclusions based on previous medical history and conditions.
Never, ever buy a policy from an insurance agent who is over-zealous and putting pressure on you. This is an important decision and you need be dealing with an agent, and a provider, who asks questions and finds out what your specific requirements are. If this is not forthcoming continue your search until you find someone you are happy with.
Life insurance through your superannuation fund may seem like an easy option, but just make sure you read the fine print. A policy taken out through your superannuation fund may not cover you for enough so if something goes wrong you could be woefully underinsured leaving your loved ones in financial dire straits.
And finally, once you have your policy in place, don’t forget to review it on a regular basis. Changes to your employment and finances can affect your specific insurance needs so ensure that you take time to assess your personal circumstances on occasion to make sure that your cover matches your requirements.