Life insurance protects your family and their lifestyle against hardship that can result from the unexpected. In this article, I’m going to share with you 3 mistakes that many people make that results in them paying far more than they need to for their life insurance.
Why You Need Life Insurance?
It’s a fact that we are all going to die but the question is when. If death or disability means the family can no longer pay the mortgage, the kids can no longer attend a private school and even the pets have to go, the outcome will be doubly disastrous.
That’s where life insurance steps in. It can’t change the death or disability status of a loved one but it can ensure there is no further hardship the family is forced to face under stressful circumstances.
Avoid paying “LAZY TAX” – review your policy regularly. Depending on your situation, you can save 30-40% by comparing life insurance companies.
You’re Wasting Money On Life Insuance If You…
- Go directly with insurers – your life insurance can be overpriced and your claim has 70% more chances to be rejected.
- Rely on Search Engines – most of the ads and search results for life insurance belongs or have ties with 3 same insurance companies.
- Conceal your medical history – if you withhold some details of existing medical conditions or your smoking habits your policy become void.
Let’s expand on these three with a little more detail to really see why you will pay more if you make these vital mistakes.
How To Not Pay More Than You Should For Your Life Insurance
1. Don’t Go Direct!
Always make sure you get quotes from at least 10 leading life insurance companies in Australia. Some companies provide quotes just from the 4-5 “preferred partners” even when they say they compare all 10. And most companies that advertise on TV provide quotes just from their own company.
ASIC’s report into life insurance industry found there were higher claims denial rates in relation to insurance policies sold directly to consumers without financial advice and that declined claim rates for direct insurance were at 12% while those for retail insurance were just 7%. That’s a 70% difference!
2. Don’t Rely On Search Engines
If you think Search Engine is a solution – beware. Most of the ads and search results for life insurance belong to or have affiliations with 3 life insurance companies:
- TAL Life – TAL, Virgin Money, Insurance Line, LifeBroker, NRMA, Compare The Market;
- Hollard Insurance – Real Insurance, Choosi, Guardian Insurance, Woolworths Insurance, Medibank;
- Suncorp Life – Suncorp, AAMI, GIO, Asteron Life.
So if you want to find independant companies or independant insurance advisers you should go much deeper into the search results – way past search page #2.
3. Don’t Lie On Your Application
It might be tempting to withhold some details of existing medical conditions or your smoking habits but it is only likely to see your policy become void in the event of a claim. Insurers are ruthless when investing claims and will go to great lengths to review your medical history and other relevant documentation to see if you’re still eligible.
Don’t try to save on your premium that way. After paying insurance premiums you want to be sure your family is going to be paid when they need it most.
The golden rule is – if in doubt, disclose!
A Life Insurance Quote Example
Let’s take a real life example to give you a frame of reference about what we’re talking about here. I put a quote comparison together recently for a male client with the following details:
- Life Insurance Cover: $1,000,000
- Age: 53
- Occupation: Manager
- Location: NSW
The resulting premiums ranged from $197.17/month (lowest) to $240.65/month (highest).
That’s a 22% difference in monthly premiums. For some occupations this difference could be even larger.
Women pay less under the same circumstances, however, the difference in price is also just as huge. In the above example, all else being equal, the premiums for a female ranged from $135.73/month to $167.59/month – a difference of 23.5life%.
So you can see that there are many factors that determine the cost of your insurance and just a small saving over on the right policy could save you many thousands of dollars in unnecessary payments over many years. Make sure you’re not making these simple mistakes when it’s time to put your Life Insuance policy in place.
We can help you find the right policy for the right price with the right level of cover for your circumstances. Get in touch with me today for a no obligation chat regarding your Life Insurance requirements. 38 years in the business has given me a unique perspective and I can help get you the best value for money.