Life insurance is that extra bit of help for the people that you care about in the event of your death. Here are a few things you might not have known about life insurance which just might encourage you to take another look at your cover.
1. Keeping your policy updated doesn’t always mean making changes
Everyone’s life includes certain milestone events, like buying a house or having a baby, and sometimes these can change what type of insurance you need. Revisiting your life insurance policy means you can make sure the cover still suits the potential debts and other needs that arise if something happens to you.
While a review of your cover might make you think that a different insurer could offer you a better deal, keep in mind that this means being underwritten again. Switching when you have new medical issues or conditions could lead to higher premiums or less cover. Speak to your AdviceFirst adviser before you make any changes, to find out about any potential repercussions.
2. Buying online isn’t the same as speaking to an adviser
Shopping online is as common as doing it in person these days, but remember that the cover bought through an adviser isn’t directly comparable to policies you look up and purchase online. Advisers generally offer a larger range of policies, more comprehensive cover, or more cost-effective cover structures.
Another big difference is underwriting. Most advisers sell policies with comprehensive lifestyle and medical underwriting compared to online policies with limited underwriting. This means the online cover is sometimes limited or your application could be declined due to a pre-existing condition. One of the benefits of an adviser is they can help tailor a policy to your circumstance.
3. There are different ways to set up premiums
Premiums can be structured in different ways in order to protect yourself against rising costs over time. Stepped premiums start at a lower price, and increase each year based on age. By contrast, level premiums begin higher but remain at that price year after year. Each has different benefits.
4. You don’t have to limit yourself to just one type of cover
Everyone has different circumstances and everyone needs something different from their insurance. It might be the case that packaging several different types of cover under one policy is the smart direction for your circumstances. Having a comprehensive safety net in place for anything that might go wrong such as cover for life, trauma, and income protection helps you and your family in a range of situations.
5. Your children might also be covered
Lots of insurance cover options offer extra cover which lets you insure your children or grandchildren under your policy. If your child is diagnosed with one of the listed conditions you’ll get a payout to use to help look after them.
This is often included in your policy for free.
6. Payouts are usually tax-free
In New Zealand, you don’t need to pay tax on most life insurance payments that you or your estate receive relating to illness or loss of life. This means you can safely calculate how much cover to get as you will be receiving the full amount. The exception to this is income protection policies, as income is tax deductible.
GST, which applies to benefits like trauma or income protection also doesn’t get deducted from life insurance premiums.
7. There is help available when choosing life cover
Despite the many complexities of life insurance there is help available. Your AdviceFirst adviser can give you personalised, tailored advice and make sure you’re getting the policy that suits you. Speak to us today.