These Are the Important Things That You Really Need to Know About Life Insurance

07 May 2021

People keep telling you to get Life Insurance but you’re not convinced just yet.

There are still a few things you need to know before you apply for a policy. Understandably, most people don’t like to think about their mortality.

We know that we will all eventually pass away. However, the thought of that happening is often so upsetting that we push it to the backs of our minds. And for many, the concept of death only hits them when it becomes a reality.

The simple fact is that anything can happen in life. And as unpleasant as it may be, you have to think about the possibility of a future that doesn’t have you in it.

  • How will your family cope without you around?
  • Can they survive financially without your income?
  • What can you do to protect them?

Getting Life Insurance is one of the best answers to that last question. However, you may not understand exactly what that entails. After all, if you try to avoid thinking about death, it’s unlikely that you’ve researched Life Insurance.

In this article, we aim to answer the key question…

What do you need to know about Life Insurance?

These are the things to keep in mind when you’re comparing quotes from different providers.

Item #1 – It’s Not Just for Older People

The idea that Life Insurance can wait until you get older is a huge misconception. However, there is a strange logic behind it. Death hopefully won’t be an issue for you for many years yet. Because of that, you tell yourself that you’ll just cross that bridge when you finally come to it.

Many people take the same approach with their retirement.

If it’s not affecting you right now, you can easily put it to the back of your mind.

However, this line of thinking doesn’t account for the fact that the unexpected can happen. Somebody who’s as fit as a fiddle could still pass away due to an unforeseen accident.

Life Insurance is for anybody who wants to provide financial protection for their loved ones. That includes young and healthy people.

Item #2 – It’s About Managing Risk

Some people see Life Insurance as a form of investment. They believe they’re essentially paying into themselves for the prospect of a return later on, should they pass away. Some policies even offer direct tax benefits that further this viewpoint.

However, we don’t consider Life Insurance an investment.

Instead, it’s a form of risk management. It’s a way for you to protect those you love if the worst-case scenario comes to pass. That’s because a good policy ensures your loved ones won’t struggle financially if they lose you.

Item #3 – The DIME Technique Can Help You Work Out How Much You Need

One of the key challenges you face comes from figuring out how much Life Insurance you need. It’s possible to under-insure yourself, which could lead to your beneficiaries not receiving as much as they should. It’s also possible to over-insure, which leads to you paying more for your policy.

Use the DIME technique to prevent either scenario from happening.

This technique covers the four key numbers you must consider when choosing a policy:

  • Debt
  • Income
  • Mortgage
  • Education

Start by ensuring you cover the income that your loved one will lose out on if you pass away. From there, add on the debts you may leave behind and your mortgage. Finally, consider how much the cost of further education for your children may be. Add all of the numbers together and you have the minimum amount that your policy should cover.

Item #4 – You Can Change Your Policy If Your Circumstances Change

Some people have the misconception that a Life Insurance policy stays the same for life.

This isn’t the case at all. In fact, it’s good policy management to make changes based on your circumstances.

For example, you may take out a policy today having just started a new job. In ten years, you may have received several promotions and raises. If you don’t change your policy to reflect those increases in pay, you have less cover than you need for your new income.

Any major life event can trigger you to update your policy. Such events include getting married, having children, and even changing jobs. The assumption that a policy should remain static may lead to you becoming under-insured.

Item #5 – It Doesn’t Have to Be Expensive

You may look at Life Insurance as an unneeded expense in your life. Worse yet, some quotes may reinforce this opinion. If an insurer provides a quote that covers everything under the sun, you may wonder if it’s worth the price.

But Life Insurance doesn’t have to cost an enormous amount of money.

The specific cost of your policy will depend on various factors. These include your physical health, age, and the type of policy you choose.

The key is that you don’t assume that Life Insurance just “costs too much”.

Item #6 – It’s Worth Naming Several Beneficiaries

You’ll likely have a specific beneficiary in mind when creating your policy. This is the person who will receive the money from the policy upon your passing. Good examples are your partner or your child.

However, it’s wise to name several beneficiaries on the policy, rather than just one.

It’s possible that your chosen beneficiary will pass away before you do. If that happens and you don’t have another beneficiary, your policy will pay out to your estate upon your passing. This increases the time needed for your family to receive the money, which could create issues.

Item #7 – Get Several Quotes

As with any long-term financial commitment, it’s recommended that you obtain several quotes for Life Insurance. This allows you to compare offerings and prices as objectively as possible.

Just note that the cheapest policy is not always the best option. Check what the policy covers before signing. You may find that a few extra dollars provide a more comprehensive level of cover.

Do You Have Any Questions?

The above covers some of the key facts about Life Insurance that you need to know before you apply. Hopefully, this means you have a better understanding of what Life Insurance is and why it’s important.

To insure or not to insure?

That is a question that only you can answer, perhaps with the help of chatting to  a few life insurers.

For an example of an award-winning life insurance company with a long-standing reputation, look no further than NobleOak.

A top-rated life insurer with over 140 years of history, NobleOak provides you with an easy way to get a Life Insurance quote. Ask around and you’ll see why so many Australians have put their trust in NobleOak over the years.

To find out more about NobleOak’s FlexiCover Life Insurance, click here or call the NobleOak team on 1300 108 490 and mention ‘Easy Street’. Easy Street members receive the first month of cover free!^

The information contained in this article is only correct at the point of time of publication. It is general information and has been prepared without taking into account your personal circumstances, objectives or needs. Please consider if this information is right for you before making a decision to acquire any product.

 

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Important Information – FlexiCover is issued by NobleOak Life Limited ABN 85 087 648 708 AFSL No. 247302 (‘NobleOak’). Easy Street is a division of Community First Credit Union Limited ABN 80 087 649 938 AFSL/Australian credit licence 231204 (‘Easy Street’) promotes the FlexiCover product under a marketing arrangement with NobleOak but does not provide any financial advice regarding - and is not responsible for - the product. NobleOak Services Limited (wholly-owned by NobleOak) pays Easy Street an ongoing commission of 15% of premium when products are acquired as a result of the marketing arrangement. This commission is at no additional cost to customers. Further information can be found in the NobleOak Financial Services Guide (FSG) available at www.nobleoak.com.au

^ First month free offer - if you apply for cover and cover is issued you will not start paying premiums until one month after the commencement date of the cover. This offer is available once only per new customer and may not be used in conjunction with any other offer.

This information is of a general nature only and does not take into consideration your individual circumstances, objectives, financial situation or needs. Before you purchase an insurance product, you should carefully consider the Product Disclosure Statement (PDS) to decide if it is right for you. The PDS is available by calling NobleOak on 1300 108 490 or from www.flexicoverlife.com.au/easystreet. NobleOak cannot provide you with personal advice, but their staff may provide general information about NobleOak life insurance products including FlexiCover.

 

Resources:

https://www.thebalancecareers.com/life-insurance-2386084
https://www.forbes.com/sites/timmaurer/2016/01/05/10-things-you-absolutely-need-to-know-about-life-insurance/#604b478560ca
https://www.huffingtonpost.co.uk/entry/life-insurance-facts-need-know_l_5d2c00c5e4b0060b11eebd78?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAFF02Jnz9rk_gu9bWFqcUK5PT5AQJ_Xbwp71tts-5-7njgfQuvlSdmGK-u6IqoHzL5zqFErJo4eX5WJa1plJZi0nDcwqpJgA-MaQ0PzGotaEuKjrc3LmZPqyx6v–4HFAijy8tDa_MjADb0Bj_SO3hE9lL6dP4Cjw9ngYiuGrotb
https://lifehappens.org/blog/10-things-you-didnt-know-about-life-insurance/
https://www.finder.com.au/weekly-cost-life-insurance

The information contained in this article is only correct at the point of time of publication. It is general information and has been prepared without taking into account your personal circumstances, objectives or needs. Please consider if this information is right for you before making a decision to acquire any product.