About Life Insurance
Life insurance is a crucial aspect of financial planning that helps safeguard your family’s financial future in the event of your untimely death or a terminal illness diagnosis. It provides peace of mind by ensuring that your family will receive a lump sum benefit that can be used to cover various expenses and maintain their standard of living.
Premiums for life insurance are determined by various factors, including your age, gender, occupation, and lifestyle habits. Typically, the younger and healthier you are, the lower your premiums will be. By choosing to pay premiums through your superfund, you can take advantage of the tax benefits associated with contributions to superannuation.
It’s important to regularly review your life insurance coverage to ensure that it still meets your needs and reflects any changes in your life, such as marriage, having children, or a change in your occupation. During the claims process, life insurance providers usually offer assistance to help make the process as smooth and stress-free as possible.
How Much Life Insurance can you apply for?
Generally, the minimum amount of cover you can apply for is $50,000 and up to a maximum of $10,000,000. However, the insurance companies will request justification for anything more than 10-20 times your annual income.
Please consider the amount carefully. Life Insurance should cover your debts and provide your family with the funds to meet their future financial needs if you were to die.
Who Can take out Life Insurance?
You must be an Australian resident and be between certain ages to take out life insurance. Depending on the company, the minimum age is usually 15-18 and maximum age is 65-75. In Australia – as long as you pay your premiums, your life insurance cover can continue until the cover expiry date, which is usually age of 99, or your full benefit is paid out. However, you can also choose to stop paying your premiums at any stage and cancel your policy. Life insurance policies are a no lock-in contract.
Life insurance in Australia doesn’t have an investment component and thus if you stop paying your premiums you will not receive any investment return or refund from the insurer. This type of insurance is particularly good for those on a budget who wish to be covered for life insurance, and be eligible for high benefits, during certain times of their life, but don’t necessarily want ongoing coverage beyond that.
Cooling Off Period
All companies provide cooling off period for your term life insurance. When you are accepted for Cover, you have 21-30 days from the date that Cover starts to check that the Cover meets your needs. This is known as the cooling off period. If you do not make a claim during this period, you can cancel the Cover during the cooling off period and companies will refund any premiums you have paid. Your request to cancel must be in writing.
When a Life Insurance claim will not be payable?
Usually, a Life insurance claim will not be payable if death or terminal illness is directly or indirectly caused, or contributed to, by:
- suicide, or an intentional self-inflicted act within 13 months of the Cover start date.
- criminal act by the insured person
- alcohol abuse or alcohol dependence.
- improper use of prescription drugs, over the counter drugs, and controlled substances; or
- a pre-existing condition