Contents

• Tips to Compare Cheap Life Insurance Policies
• Benefits of Term Life Insurance
• Mortgage Protection Insurance
• What to Be Aware of When Comparing Cheap Life Insurance
• How to apply for Term Life Insurance

Tips to Compare Cheap Life Insurance Policies

Term life insurance is the most common form of life insurance policy you will be able to apply for in Australia, as it is also one of the simplest forms of insurance to apply for and use as well. Term life insurance covers you for a certain number of years, where you pay a certain premium each month for coverage. The policy does not accumulate any cash value and has no surrender value, and is instead lying in wait until it is needed, up to the insured amount.

Term life insurance is so popular because you can be covered for very large payout amounts in relation to the small premiums you pay each month. A term life insurance policy is also very similar to other insurance policies you already have such as for your car or home, and it is also one of the cheapest ways to secure life insurance.

A term life insurance policy is defined by three main factors – the amount you are insured for, the premium you pay each month and the length of time you are covered for. Term insurance works by insuring you for your chosen term and if you die before the term has ended, your estate or your beneficiaries receive a payout upon submitting a claim to your insurance provider. However, if you do not die before the term of the life insurance policy, there is no payout.

Once the term of your life insurance policy ends, it is up to you to renew or cancel the policy. This is because unlike other forms of life insurance such as permanent life insurance, the premiums you pay do not build a cash value towards your payout, instead if there are no premiums being paid, there is no coverage, in the same way that if you have an accident while your car insurance policy has lapsed, you are not insured for the damage.

Benefits of Term Life Insurance

Just because term life insurance is the most popular form of insurance, does not mean it is right for everyone. However, you could benefit from a term life insurance policy if you are on a tight budget. For example, if you and your family are going through financially tough times and working hard to repay a mortgage and other debts which could not be serviced if you died and left your family without an income, then you may choose to take out a term life insurance policy during this time, and you don’t have to extend the cover if you don’t want or need it anymore.

Once your debts are repaid you will have built a strong asset base, and no longer have to worry about how your family will survive financially without you. This makes for a very small monthly premium which is required when compared to other forms of life insurance, and in relation to the lump sum payout your family can receive.

You may also decide to consider life insurance even if you are not the main income earner of the family. For example, if you are a stay at home parent, you should make sure you are covered on the term life insurance policy too, because if you were to die, your family would need funds to cover childcare costs and day to day expenses involved with raising young children.

Mortgage Protection Insurance

This type of insurance is to protect the bank and all payments will be made directly to them and not to the policy holder:

• Payouts for serious illness, injury or death Your mortgage is likely to be one of the biggest expenses your family will have to service if you cannot bring in an income, and maintaining the security of the family home is paramount when other aspects of your life have fallen to chaos. Therefore, you can take out insurance to specifically cover the repayments of residential, commercial or investment properties and the payout will be used exclusively to cover your outstanding mortgage amounts.
• Payment upon your death You can be covered for mortgage repayments if you die, and the outstanding balance of your home loan can be repaid in full.
• Payment if you become disabled If you are unable to work and earn your normal wage, your monthly mortgage repayments will be paid by your insurance.
• Payment if you lose your job – Your mortgage protection insurance can cover your repayments for a certain period of time, allowing you time to find another job and not default on your loan.
• Payment if you suffer a major trauma This generally includes coverage for a heart attack, a stroke, an organ transplant, cancer treatment or coronary artery surgery. In addition to your loan payments you can often receive an additional lump sum payment of up to $50,000 to help with expenses.
• Just mortgage repayments It is important to remember that mortgage protection insurance generally only covers you for the amount of your mortgage repayments, and there are often limits and time periods which restrict those payments as well. Therefore, for more comprehensive cover you may still want to couple mortgage protection insurance with a term life insurance policy.

What to Be Aware of When Comparing Cheap Life Insurance

• Reviewable Premiums. Some insurance policies will have reviewable premiums whereby the insurer is able to increase your monthly premium further into your coverage term. For this reason it may be wiser to choose the policy offering the lowest guaranteed premium.
• Joint Policies. While taking out life insurance with your spouse may reduce your monthly premiums, in most cases you will not recieve the same amount of coverage. If you were to take out $200,000 worth of coverage that will be coverage for only one person in the event of death within the term. The other partner will be left without any insurance if one of them dies.
• Income Protection Insurance and Critical Illness Insurance Beware. If taking out income protection insurance or critical illness insurance it is essential that you do not compare policies on cost alone. Cheaper plans may not have as comprehensive cover with the selection of medical conditions covered being far narrower.
• Adequate Death Benefit. It is crucial to ensure that in the event of your death that there is an adequate amount to support your dependables. If buying term insurance at a lower rate there is a chance that policy holders may not recieve the best cover possible.

How to apply for Term Life Insurance

To help with your life insurance assessment process, or to answer any other questions you have about term life insurance in Australia, start a life insurance comparison now or enquire with Life Insurance Finder.