My 42 year old daughter with two teenagers 17 and 15 is wanting to take out Life Insurance. Has anyone any suggestions as to which companies are good to deal with please?
Life Insurance
caro on 25/03/2013 - 19:58
Comments
first thing,
google "life insurance calculator" to get an idea of HOW much insurance she needs. She needs to consider things like:
- has she seen an financial adviser? they will help you consider how much protection she needs depending on her current and future circumstances (income vs expenses, debt vs assets, kids, lifestyle, etc)
- what type of cover she's looking for: death, tpd, trauma or income protection
- which insurance medium she rather: Direct (no frills online/telephone based), Group (normally through super funds as mskeggs said) or Retail (full service insurance, normally through financial advisers)
- stepped premiums (where your insured amount stays constant, but your premiums increase) vs level premiums (where you insured amount decreases as you age, but your premiums stay constant)
there's a whole range of insurers trying to get their grubby hands on your money, so shop around:
http://www.canstar.com.au/life-insurance/
http://www.iselect.com.au/life/?onsite=life_fr_health
http://www.lifebroker.com.au/hope that helps
thanks very much for all your help - I really appreciate it - Happy Easter
Yes. First step is to check her super fund - she probably already has a level of cover as mskeggs has said.
ok thanks
Hi caro,
There's a bit more involved in getting Life insurance than just pick an amount to pay for debts. I had a good experience with the guys at ccafp.com.au so they may be able to help your daughter as well. I would however make sure to ask the following questions:
1. what are the differences between insurers
2. why should I take insurance inside and/or outside of Super
3. Set up beneficiaries for children if the adult beneficiary passes away
4. Make sure that they give you at least 5-7 insurersAs for the kick back, all brokers that don't charge clients for service, receive commission from insurance company. However all of that is disclosed in a document called Statement of Advice (SoA) which must be sent to and signed by client before any application can be submitted to the insurance company.
Hope this has been a help.
Good luck.
There is more to choosing life insurance than just paying off debts, but life insurance calculators are set up to attract the highest premiums.
Insurance shouldn't be in place to make the beneficiaries of a death like Lotto winners, yet iSelect, for example, suggests I should have $1.5m in life insurance!
Yes, I could probably earn that much before I retire, but why should my beneficiaries get such a large benefit when they would otherwise see only a fraction of this amount were I to live.
I'll keep the hundreds of dollars a month in premiums to spend now, and have a much more modest insurance policy.
Most people take out their life and tpd cover through their super fund so they don't have to pay the premiums from personal cash flow.
I suggest talking to both your super fund and a risk insurance specialist. In particular the need for income protection or trauma may be more important in your daughters situation.
Please avoid the direct insurers as they have the highest premiums with the worst definitions and claims may not cover pre existing health conditions.
Insurance is definitely one area where the cheapest premium can backfire on you. It typically means weaker definitions and a lower chance of being paid a claim. Do your research.
Thanks again everyone - there is a lot to think about
I have a retail life & TPD policy with the "level" premiums deducted from my super fund.
I am paying higher premiums for the first 7 years but they will then only rise modestly for the next 20 years. The long term cost of my death/TPD will be much cheaper than the traditional "stepped" premium which most people have and gets prohibitively expensive as you get into your 50's and 60's (a time when more likely to claim on as well).
If you are young and healthy it's worth a strong look at "level" premiums.
Depending on the budget and type of cover required (eg I have life insurance from my super and top-up from another insurer which gives me additional cover such as higher payout sum, critical illness such as cancer etc). Maybe worth checking with a financial planner from your bank? You DO NOT have to purchase anything from them but it is always good to know a bit more about level of cover available
If she has a super fund she would be well advised to talk to them as they can arrange the policy premiums to be paid in pre-tax dollars (and she may already have this insurance, it is included by default).
My other suggestion is to google search for a broker and get a preliminary quote from a few companies to get a feel for what she would be paying.
These guys: www.ccafp.com.au for example, can produce a quote from a dozen or more insurers. I'm not endorsing them, by the way, but they will give a quick response.
Be aware that brokers will get a kick-back from the insurance company, and possibly could let that effect their advice.
Finally, I strongly urge your daughter to consider what a sensible policy value should be.
Many people seem to think insurance should set the beneficiary up like royalty if it ever pays out. A more sensible measure might be to aim for a policy to pay off any debts and cover expenses for a period (a year or two?) until the beneficiaries have the opportunity to get sorted.