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Factors to Consider Before Buying Life Insurance

Thinking about buying life insurance? It’s a great idea to purchase life insurance to ensure that your family and loved ones are financially provided for in the event that something happens to you. But there are lots of policies out there and choosing the right one can be difficult.

Before you decide to purchase any life insurance cover, consider these key factors to help you in making this important decision.

How Much Cover Do I Need?

The amount of life insurance cover that you require is the most important thing to consider when choosing your insurance. This will depend on a range of factors, including your own financial circumstances, your stage of life, and your number of financial dependents.

For example, if you have young children or other people who depend on you financially, you will probably want to choose a higher level of life insurance, so that they will be covered long into the future after your passing. Additionally, if you have debts that will need to be accounted for after your death, you need to take these into account when choosing insurance.

What Type Of Cover Do I Need?

There are a few types of cover available.

  • Life insurance or death cover – for the event of your passing.
  • Total and permanent disablement cover – if you suffer an injury or illness that leaves you critically disabled
  • Income protection cover – if you’re unable to work due to injury or illness

Are There Exclusions On My Policy?

It’s important to make sure that your insurance policy is covering you for any potential circumstances. Some policies have exclusions, such as if you die during a dangerous activity or from a pre-existing medical condition. If you work in a profession that exposes you to risk, or you have a liking for dangerous adventure sports, you need to check if these are going to exclude you from being covered.

How Long Does My Cover Last?

While it might say ‘life’ in the policy description, it pays to dig a little deeper! Some life insurance policies have an expiry date and will only cover you for a set period of time. Especially if you’re getting insurance earlier in life, make sure you check how long the cover lasts for, and update it if necessary.

Is My Insurance Medically Underwritten?

Some insurers will require you to provide medical details – either through a physical exam, a questionnaire, or through other means – before giving you insurance cover. They may also impose policy exclusions based on your medical history and condition. If you do not disclose medical information, it may affect your future claim on the policy.

Although there are some insurance policies that do not assess your medical condition before insuring you, these can often be more expensive or can contain exclusions for pre-existing medical conditions.

How Much Is Cover Going To Cost?

There are two types of insurance premiums, and the one you choose will affect the cost. Level premiums remain the same throughout your policy (other than adjustments for inflation). Steeped premiums increase as you age, becoming more expensive the longer you have your policy. Level premiums start out more expensive but can potentially save you money in the long run if you have your insurance for a long time.

Make sure you compare quotes from different insurance providers to find the best life insurance for your needs.

Sally Writes 21 Feb 2021