Benefits of Life Insurance

Published: June 16, 2017

Life Insurance provides a number of benefits to you and your family – most of all, providing a lump sum benefit if you pass away or are diagnosed with a terminal illness. This benefit can potentially allow your family to be protected financially if you are no longer around, particularly if you are the sole or predominant income earner.

Why buy life insurance?

A life insurance benefit can be used for:

  • Payment of mortgage or rent
  • Payment of other debt including credit cards and car loan repayments
  • Day to day living expenses such as groceries and food, bills, utilities
  • School fees and other educational expenses
  • Funeral Costs

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Common features of Life Insurance

The life insurance policies  generally offer the following features:

  • 24/7 Worldwide Protection:  cover is provided 24/7 anywhere in the world.
  • Cover until age 99 or 100:  life policies usually offer expiry ages up to 99 or 100.
  • Extensive cover: generally most deaths are covered except for suicide in the first 13 months.
  • Choice of Premium Style:  You can generally choose between stepped and level premium styles to suit your budget.
  • No maximum cover:  generally there is no maximum level of cover as long as you afford and justify the level of cover requested.
  • Cover for pre-existing medical conditions: Select insurers might include cover for your pre-existing conditions. However, you need to FULLY DISCLOSE these at application time.
  • Cover for dangerous occupation/past times: Select insurers do provide coverage that includes your dangerous occupation and past times.

Common built-in benefits

Life companies generally provide a number of built-in benefits to their policies, designed to enhance them and make them more attractive to you.

Funeral Advancement Benefit: Many policies in Australia offer a built-in funeral advancement benefit which is paid immediately upon proof of a death certificate. The funds can be used to pay for costly funeral arrangements, with the balance paid out to your estate or nominated beneficiaries thereafter.

Terminal Illness Benefit: If you are diagnosed with a terminal illness and have less than 12 months to live, most life companies will pay your full life insurance benefit to your beneficiaries.

Indexation: To keep your policy up to date with inflation, insurers will generally offer to increase your level of cover by either the CPI or a set percentage each year. The increased level of cover will generally mean an increase in your premium.

Financial Planning Benefit: If your beneficiaries receive a lump sum benefit from your life insurance policy, select insurers will reimburse them for financial planning advice they receive.

Future Insurability: You can generally increase your level of cover, without supplying additional medical information, when significant life events occur such as getting married, taking out a loan for your first home, increasing your mortgage, having children etc.

Premium Freeze: If your policy is a stepped premium policy and your premiums are becoming a little too expensive for you, you can opt to freeze your premiums for a 12 month period. Your level of cover will reduce as a result of freezing your premiums.

Suspending Cover: You can opt to suspend your premiums and cover for up to 12 months due to financial hardship or if you are not working due to leave, long service leave or sabbatical.

Optional Benefits

To further enhance or customise your policy, life companies will generally offer a number of additional optional benefits:

Free children’s insurance: Select insurers offer free children’s insurance with their adult life insurance policies or with trauma policies. Cover provided is generally up to $10,000. You can opt to increase the level of child cover up to $250,000 but this is a paid option.

Business Guarantee Option: Allows you to increase your business related life insurance, without supplying additional medical information, as your business grows.

ComparingExpert Benefits:

  • Free comparisons from Australia’s leading life insurance companies
  • A dedicated in-house claims service
  • Free policy reviews
  • Priority assessments through our excellent relationship with insurers

Special Offers: 

Discounts for couples: You can save 5-10% on your premiums if you get cover for both you and your spouse. Over the life of your policy, these savings could add up to thousands.

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