Comparison of the best life insurance quotes – get a cheaper deal on your life insurance online

Contents

• Who Needs Life Insurance
• Types of Life Insurance to Compare
• Income Protection Insurance
• Understanding Your Position
• Coverage in Times of Illness
• What Are Critical Illnesses

Who Needs Life Insurance

Life insurance is something that we all think about at one time or another. You might think that you do not really need life insurance if you are you are young and healthy or if you do not contribute financially to your family. That could not be further from the truth. Anyone who provides for another person or people needs to have a life insurance policy. If you are responsible financially for your family by being the only one who earns an actual paycheck then you need life insurance. If you provide financial support for a sibling who cannot take care of themselves you need life insurance. If you are a homemaker who financially supports the family by staying home with the children, taking care of the house, and managing all of the meals then you need life insurance. If you have children, whether they live with you or with your ex-spouse you need life insurance.

Too many stay-at-home mums or dads think that they do not need life insurance since they do not bring in an income. But, think for a minute about the cost that your family would incur if they had to pay someone to do your job. If you were gone your family would need to start paying for childcare so your spouse could continue working. Your spouse would probably need help around the house, someone to clean and cook and do all of the million other things that you do to manage your home on a daily basis. All of those things would cast a significant amount of money. Even if you think your family and friends would help out, you should have some life insurance that can help the process along especially in the beginning.

Life insurance is not only there to help your loved ones in the event of death. Life insurance policies can pay out if you are disabled or sick and cannot work. There are several different forms of life insurance including serious illness, trauma, disability, and income protection that can help you and your loved ones get through difficult times.

If any of these statements apply to you then it is likely that you need life insurance.

1. I have major financial obligations.
2. I have a large estate that may take a long time to distribute properly.
3. I have dependent children or relatives.
4. I own a business.
5. I am married.

Types of Life Insurance to Compare

The most common type of life insurance that almost everyone needs is called term life. This insurance will pay out a cash amount if you die. It is usually the most cost effective form of life insurance as the coverage is usually a significant amount for just a few dollars a month. There are factors that will determine how much your insurance premium is that are based on assessments done by the insurance provider. In most cases they will take into account your medical history which means you will probably have to have an examination and an AIDS test before the will consider covering you. They will also take into account your gender, with women typically having lower premiums then men.

Other factors will be your life expectancy and risk factors like whether or not you smoke and if you are obese. Those who have higher risk factors will pay more for insurance coverage. As you get older your insurance premiums will usually increase because age is a risk factor. It is very important that you get a policy that is ‘guaranteed renewable.’ This ensures that no matter what your current health is your policy will be able to be renewed. If it is not a guaranteed renewable policy you could be rejected by the provider when it comes time to renew if your health has gotten poor. Once you are already sick it is very difficult if not impossible to get new life insurance coverage.

Determining how much life insurance you need can be tricky. An insurance provider will look at your particular situation and come up with a number based on your expenses and the ages of your children. In general, a policy that pays out ten time the amount of your yearly salary is recommended. Your aim should be to get as close to this number as possible while still getting an affordable premium amount. Your term life insurance will not be tax deductible but, if it pays out the lump sum amount will be tax free.

Another form of insurance available is critical illness insurance. This will pay out a set amount in the event you fall ill and are not expected to live more then one year. Should you live longer or actually recover from your illness you will not have to pay back the insurance pay out. This insurance can make the last year of your life more comfortable and help to pay for medical bills so that your loved ones are not left with a huge debt when you pass away.

Whole life insurance was, at one time, quite popular. The idea was that the policy was both insurance and investment with your premium remaining the same until you die or until the investment matures. Typically it would mature when the insured person turned age 60 or 65. If you were to die prior to that age then the policy would pay out a lump sum. If you are alive when it matures you would get the lump some of the investment portion. The problem with these policies is the investment portion did not give back very good returns. Most financial advisers would say that the customers were better off with a traditional life insurance policy and to look for other ways to invest their money.

Membership in a superannuation fund usually includes some life insurance. While these funds offer a good and inexpensive way to get life insurance that also have some liabilities. For example, if you get a new job or actually fall ill and have to stop working you may have to leave the fund. It may be difficult then to get new life insurance from another company. If you have life insurance through your superannuation fund it might be a good choice to get additional life cover from another company as back up.

One of the of the other issues with superannuation cover is that the fund’s trustees are legally able to overrule your beneficiary nomination. In addition the money that is paid out to your beneficiary is subject to tax if they are not a dependent which is not the case when you have traditional cover from and insurance company.

Here are some questions to ask yourself as you consider how much insurance coverage to purchase.

1. What will be the costs for my loved ones in the event of my death, like funeral and burial expenses?
2. Are there one-off expenses like paying off the mortgage or the vehicle loans that should be covered?
3. What are the actual living expenses for my family each year?
4. How many years will I need to cover until my children are no longer dependents?
5. Do I have assets that my family will be able to use to help cover expenses?

Income Protection Insurance

While life insurance is valuable to you and your family in the event of your death it does not help you pay for expenses should you become unemployed or are unable to work for health reasons. If you get into a car accident that requires you to be off work for a year to recover how will you pay for every day expenses? Things like the mortgage, credit card bills, food, and clothing will still need to be purchased even if you are unable to work. You might not realise it,but you are far more likely to become unable to work then you are to die while you have a life insurance policy.

If you have income protection insurance you can protect yourself and your family in the event that you are unable to work. Many of these policies will pay out up to 75% of your net income. The policy you choose will determine the length of time that these payments last with some being for set period of time and others paying out until you are age 65. Income insurance comes in several different forms.

Understanding Your Position

It is important that you understand what you are buying and exactly what is covered with a particular policy. Most of the time you will find that the more that is covered by a policy, the more costly that policy is going to be. However, getting a cheap policy that offers little coverage is not worth the investment, even if it is a small one. Income Protection is as low as around 2% of your yearly salary but protects up to 75% of your salary and can be fully tax deductible. If you purchase this type of cover make sure that you claim it when tax time roles around.

There are several factors to consider when you are looking at income protection insurance. Some policies are agreed value while others are considered indemnity plans. An agreed value plan you would be paid a monthly amount that you agree to when you first take out your policy. An indemnity plan will look at your actual income when you make a claim. If your income has risen since you took out the policy this would be favourable. But, if our income has gone down then you might get less of a monthly pay out then you actually need.

In addition to choosing between agreed value and indemnity you will have to decide how long of a waiting period you want to have before you receive your first income insurance payment. During this time you would have to live off of your own savings or assets until your insurance payments kick in. If you have enough in an emergency fund to survive for a longer period of time you will be rewarded with a significantly lower premium.

The term of your policy will effect how much the premiums cost. If your policy only pays for a couple of years instead of until you reach age 65 it will be much cheaper. While there may be savings involved in the shorter term, be sure that it gives you enough time to bounce back from and illness or injury and start supporting yourself financially again. Income Insurance policies also have the option of a step-up clause which will take into account inflation. This is better for those policies that pay out until age 65, because a two year only policy is not usually worth the added expense. Keep in mind that a policy that pays out until age 65 should be indexed so that it retains its value in the face of inflation.

There are also inherent definitions in your income insurance that you will need to understand. Many policies have a provision that determines whether or not your are disabled from working in your own occupation or if you are unable to work in any occupation. If you are a seamstress and develop terrible arthritis then you will not be able to work in your own occupation, but not in any occupation. If your policy only covers you for your own occupation then you might not be able to make a claim.

Many polices combine the two clauses giving you a couple of years coverage if you cannot work in your particular occupation and longer if you cannot work in any application.

Coverage in Times of Illness

Trauma insurance does not work like income or traditional life insurance. These policies pay out a set amount when you are diagnosed with a critical illness whether or not you are still able to work. This type of insurance can be quite helpful because it gives you the extra money that you need to prepare yourself and your loved ones for the road ahead. The money can be however you want to use it. You might want to pay off your mortgage or vehicle loans, take the family on a trip, replace big ticket items, or just cover your portion of the medical bills. It gives you some peace of mind that you can do these things without tapping into your income or your savings.

What Are Critical Illnesses

1. Heart surgery or heart attack
2. Alzheimer’s disease or dementia
3. Parkinson’s disease
4. Organ transplants
5. Motor neurone disease
6. Paralysis
7. Cancer
8. Strokes

Disability insurance is another option that can help a great deal in a crisis. Depending on your situation, disability is defined in different ways. If you are disabled from doing your particular job then you could get the lump sum pay out from this insurance. The claims are usually a set amount that usually matches your life insurance amount. These policies can be tricky to make claims on so be sure you understand it fully. Make sure that if pay out on a disability claim cancels your death cover it is enough for you to live on for the rest of your life.

Getting a quality life insurance policy is one of the most important decisions you will ever make. Be sure to consider all of your options and get one that suits the long term needs of you and your loved ones.

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