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The truth about life insurance
Many people find life insurance confusing – so if you have some questions about it, you’re not alone. We’re here to help so you can make an informed decision.
Here are key truths to know:
Life insurance is important
Unfortunately there are many things in life that you can’t predict and being prepared is your best chance at protecting yourself and your family against the unknown.
Everyone should cover the basics like debts and funeral
Adding up your debts and funeral expenses (which can range from $5000 to $20,000) can be a good starting point for considering your cover needs.
The younger you are the better it is
Older people and those not in the best of health usually pay higher rates for life insurance – so it can be beneficial to buy early as you may secure a lower premium if you are in good health.
You can get life insurance in less than 5 minutes
Complicated lengthy forms are no longer the norm. Buying life insurance has never been easier, thanks to the internet.
Cover can cost as little as two cups of coffee a week
Buy enough cover to meet your needs. Life insurance is no place to skimp; you should buy what you need and can afford.
Medical tests are a thing of the past
Some companies no longer require medical tests. But be sure to tell the truth. There’s no sense in shading the facts on your application to get a lower rate. If a claim is made, the insurance company may investigate before paying.
You can apply even if you have health problems
Sure it might mean your premiums are a little higher or you only qualify for accidental death or funeral cover, but some cover is better than no cover at all.
Full disclosure is important
Claims can be declined if you didn’t disclose everything when you applied. So don’t pretend something didn’t happen just to try and get a cheaper premium. If you buy insurance, check to see if there is a “duty of disclosure”. If you fail to provide any information that is material to your application or if any information provided is substantially incorrect then your policy may be avoided from inception and premiums forfeited.
Understanding life insurance commission payments
Life insurance is sold by advisers, banks and life insurance companies directly. Policies sold usually receive a commission which can be up to twice the annual premium of the policy. This commission payment can be clawed-back if the policy is cancelled within two years.
After the two year period, you may be encouraged to switch to another life insurance provider – in which case the seller will again receive a commission payment.
While this is not common, it can happen. Make sure you consider your own cover requirements and your policy’s history before agreeing to switch to a different life insurance provider.