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Life insurance provides a lump sum payment to designated beneficiaries if the policyholder dies or becomes
terminally ill. This amount can be used to pay off debts, cover daily living expenses, and maintain the
family's desired lifestyle beyond basic necessities. With life insurance, you can be assured that your
loved ones will be financially protected and secure in the event of your untimely death. If you have
dependents who rely on your income, either fully or partially, to pay household bills and other expenses,
then life insurance may be right for you.
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First, consider what your family and loved ones would need to maintain their current lifestyle and avoid
financial hardship if you were to pass away or be diagnosed with a terminal illness. The amount of life
insurance coverage you need depends on various personal factors, including your age, income, dependents,
debts, and lifestyle. Ensuring you have adequate coverage is essential to protect your loved ones in the
event they need to make a claim. As the primary provider for your family, you are likely responsible for
expenses such as mortgages, loans, school fees, and daily living costs. These expenses can quickly add up
and cause significant stress if your loved ones cannot cover them in your absence. It's important that
your life insurance coverage not only meets your family's immediate needs but also considers their future
requirements.
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Life insurance, Total and Permanent Disability (TPD) insurance, and Income Protection insurance can all be
funded through either a retail Superfund or a self-managed super fund (SMSF). Opting to pay these
insurance premiums through Super grants you a 15% tax rebate. If you already hold insurance through your
Super, we can conduct a thorough review to ensure its alignment with your requirements. Our objective is
to ascertain that you have the appropriate coverage to safeguard both yourself and your loved ones.
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Underwriting is the process where insurance companies assess a customer's eligibility for insurance
products. In the realm of Life Insurance, two key components are considered: medical underwriting and
financial underwriting. This includes answering inquiries regarding your health, family history, financial
history, details about your occupation and participation in sports or recreational activities. While
medical examinations may not always be required, they are only requested to aid in the evaluation process.
All information provided for medical underwriting and financial information is strictly confidential.
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Having a pre-existing medical condition doesn't mean you can't get life insurance. Each application is
reviewed individually by the respective underwriters to understand the risk involved and the cover
options. Insurers may offer coverage by adjusting your premium or excluding certain conditions, rather
than denying you outright. It's important to answer all questions truthfully to avoid issues when making a
claim. Insurers consider personal factors such as age, health, and lifestyle before approving your
application.
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When you take out life insurance, you can choose between two premium structures: stepped or level. Each
has its own advantages and disadvantages, and the best choice depends on your personal circumstances.
Stepped Premiums: How it works: Premiums increase annually as you age, reflecting the higher risk of
claim.
Who it suits: Those looking to save on initial costs or needing insurance for a shorter term.
Pros: Lower initial premiums; suitable for short-term insurance needs.
Cons: Can become very expensive over time, especially in older age when coverage is most needed; less cost-effective over the policy's life.
Level Premiums:
How it works: Premiums are more evenly spread over the policy's duration, based on your age when you start the policy. Often transition to stepped premiums after a set period (e.g., post-65). Who it suits: Those seeking long-term coverage with more predictable costs.
Pros: Potential savings over the policy's life; more consistent premium budgeting; ideal for long-term reassurance.
Cons: Higher initial costs; eventual transition to stepped premiums may reduce long-term savings.
Considerations for Both:
Premiums may change if the sum insured changes due to voluntary increases, indexation, or insurer rate changes.
Government charges (e.g., stamp duty) can also affect premiums.
Summary:
Stepped Premiums: Lower initial costs, higher long-term expenses.
Level Premiums: Higher initial costs, potentially more economical over time with better long-term budgeting.
Regardless of the premium structure, your insurer may adjust premiums due to factors like government legislation changes, operating costs, or commercial viability.
Who it suits: Those looking to save on initial costs or needing insurance for a shorter term.
Pros: Lower initial premiums; suitable for short-term insurance needs.
Cons: Can become very expensive over time, especially in older age when coverage is most needed; less cost-effective over the policy's life.
Level Premiums:
How it works: Premiums are more evenly spread over the policy's duration, based on your age when you start the policy. Often transition to stepped premiums after a set period (e.g., post-65). Who it suits: Those seeking long-term coverage with more predictable costs.
Pros: Potential savings over the policy's life; more consistent premium budgeting; ideal for long-term reassurance.
Cons: Higher initial costs; eventual transition to stepped premiums may reduce long-term savings.
Considerations for Both:
Premiums may change if the sum insured changes due to voluntary increases, indexation, or insurer rate changes.
Government charges (e.g., stamp duty) can also affect premiums.
Summary:
Stepped Premiums: Lower initial costs, higher long-term expenses.
Level Premiums: Higher initial costs, potentially more economical over time with better long-term budgeting.
Regardless of the premium structure, your insurer may adjust premiums due to factors like government legislation changes, operating costs, or commercial viability.