Life Insurance at any age - What’s right for you?

Do you really need life insurance in the prime of your life when you feel fit, healthy and can take on the world? The answer is YES. If you have family members or loved ones who rely on your income for financial support, then you need to have life insurance at any age.

The next important question is – what type of life insurance do I need? Life insurance policies vary from one provider to the next. Ensuring that you have a policy to meet your individual needs and will provide adequate cover in the event that something happened to you is extremely important.

What is short term life insurance?
This type of cover is for a defined period or until you reach a certain age, at which time it will expire. You can choose to be covered for a fixed term – 10, 20 or 30 years or you can choose for the insurance to expire at a certain age. You could also select to pay a premium each month for a ‘death benefit’ which would be paid out in the event of your death.

There may be an option for a terminal illness diagnosis benefit which covers you if such a diagnosis is made during the term of your policy. It pays out upon diagnosis and usually with a 12-24 month life expectancy. The funds can be paid towards medical expenses or used to make decisions for your family. If you were to unexpectedly die whilst the policy is in place, the pay out could be used by loved ones to help support them financially.

What’s long-term life insurance?
Depending on the policy you choose, this is generally ongoing for the whole of your life or may expire at age 99. This type of policy usually pays out for terminal illness, premature death or when you die. The policy may also offer additional types of cover such as children’s cover, total and permanent disability (TPD), trauma or critical illness cover.

Total Permanent Disability Insurance
If you were no longer able to do your job as a result of becoming totally and permanently disabled, you would be covered by taking up this option. TPD may be included in some policies, or an additional cost so be sure to fully read and understand the insurer PDS before you sign.

Children’s Life Insurance
Children’s insurance provides a benefit if the insured child suffers death by any cause, including a serious or terminal illness. Each provider differs but typically the cover is for blindness, cancer, chronic kidney failure, deafness, encephalitis, major head trauma, or severe burns. Check the PDS for any specific coverage details to ensure you are getting the right cover.

Serious Illness Insurance
Serious illness insurance is provision of a benefit if the policy holder suffers a specific condition, as listed in the PDS which might be a heart attack, stroke, cancer, or coronary artery bypass surgery. Always check for exclusions for various types of Cancer or self-inflicted injuries.

PRO’s & CON’s

Pros and cons of short-term life insurance with expiry date:

• PRO: If you only want a basic policy and a relatively low amount of cover this could be a good option
• PRO: It’s usually cheaper than a standard life insurance policy
• PRO: Quite often it’s a simpler and faster application process
• CON: It is a fixed term so if you outlive your policy, you generally won’t receive a payout or a refund on the premium
• CON: If you outlive the policy term, you might feel you’ve lost money on the premiums paid
• CON: Generally not very flexible so there are limitations to changes to the policy

Pros and cons of long-term life insurance (guaranteed renewable)

• PRO: The policy covers you for life or until age 99 for some policies
• PRO: There may be an option to have a higher cover amount available in case you want your mortgage or other larger debts to be paid out or to maintain a certain standard of living for your family
• CON: A more thorough application process which may include medical tests

Which is the right one?
Everyone is different and you need to consider which cover will suit your needs best. If you’re older and kids have left home, you may choose a lower-cost policy that will boost your partner’s income and help to cover things like travel, or other expenses if you died, so a short-term life insurance policy could be best.

If you’re still working on your career goals, raising kids, and have a family who relies heavily on your income, a long-term life insurance policy with a higher limit of cover, guaranteed renewal and additional options may suit better. This type of policy can cost more but can also be more flexible in terms of what covers can be added and because it may offer a higher level of cover, it can help pay out large debts like a mortgage.

Your Policy Checklist
Before you take out any life insurance policy, check the following closely:

• What exactly is covered and what isn’t
• The amount of cover you choose needs to suit your family’s needs now and in the future
• Any additional benefits or features of the policy
• Flexibility of the policy (in case you want to make changes or if your circumstances change)
• Any waiting periods applicable before you’re able to make a claim
• What premiums will cost you now and in the future
• Consider your own needs, lifestyle, circumstances and medical history when choosing the right policy
• Always read the PDS in detail

Plan for the unexpected, just in case
Tomorrow is never guaranteed so it’s important to plan for the future in case something unexpected happens to you. A life insurance policy can help give you peace of mind, knowing you have a financial plan in place for your family in case life took a turn for the worst.

Still not sure about which type of life insurance will work best for you? Find out more information here or if you’d like to compare different life insurance policies, we can assist with that too!

General advice warning. This advice does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. Should you require any help please contact Wealth Smart on 1800 765 100.