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Life Insurance

Life insurance can be purchased as either whole or term life and it is necessary if you have family that relies upon you. Whole life insurance will cover you for the rest of your life and term life will cover you for a specific period of time.

What’s covered?

Life insurance can pay out a lump sum or an annuity (in installments) if:

  • You pass away. A benefit will go to your loved ones in the event of your death.
  • You become terminally ill. If you are diagnosed with a terminal illness (you are likely to pass away within 12 months).

What can a benefit be used for?

Living expenses image

Every day living expenses

Mortgage repayments image

Mortgage repayments

03-debt

Other outstanding debts

Education expenses image

Education expenses


How do I actually compare policies?

The process of comparing different policies is actually quite easy if you follow some of these steps:

Find out what you can actually be insured for and what you stand to receive in the event of a claim. Some insurers will allow for an unlimited amount of life insurance to be taken out while others will cap it for certain occupations and age groups.

Consider how age will affect when you can no longer apply and when your policy will stop covering you.

If you are a senior looking for life insurance, age limits and when your policy will end can vary between insurers.

Some insurers will offer what is known as “guaranteed issue”, which lets you increase your coverage without having to take another medical exam.
Look at the range of features provided automatically and those that can be purchased for an additional premium. It might be painful but actually taking the time to get an understanding of these and whether they actually apply to your situation is extremely valuable.

Most insurers will let you combine your life insurance with disability insurance and critical illness to ensure you have adequate protection for “living events.” Combining insurance should result in a premium discount.
Conditions on coverage that is provided can vary between insurers based on your occupation. There may be insurers specializing in life insurance for your occupation, for example, if you are a high-risk worker.
Find out if there are any restrictions to adjusting your level of insurance, who is covered on your policy and if you can remove certain features.
An insurance consultant can help you assess your situation and find a policy to match your insurance requirements. They can use their knowledge of the insurance industry to help you find discounts and insurers willing to work with your situation.

How much coverage should I get?

Everybody’s situation is different so theres no perfect answer. Generally, you want to determine an amount that will cover the immediate and ongoing costs if you pass away so that your family or other financial dependents can continue their current way of life.

Consider the following:

1. Outstanding debt you don’t want to leave behind

  • Outstanding mortgage payments
  • Any personal debt you still have (personal loans, car loan, credit cards)

2. Financials you already have that your family can fall back on. Determine how many years you would need to cover these living expenses and offset it against any savings/assets that could be used in the event of your death. This may include:

  • Savings you have accumulated
  • Assets that may be sold
  • Investments (property, stocks, etc.)
  • Life insurance you already have in your 401K

3. Your families ongoing living expenses

  • Rental payments
  • Vehicle and transport costs
  • Food and other everyday expenses
  • Education/child care costs
  • Entertainment and vacations

4. Length of coverage to choose. Some things to consider when determining your length of coverage include:

  • Your age and the age of your partner
  • Earning capacity of your partner now and in the future
  • Number of children and their ages

What types of coverage is out there?

Payment type: Lump-sum payment or an annuity. Main purpose: Provides a payment in the event of death or terminal illness to the insured’s beneficiaries. Key features:

  • Advance payment for funeral expenses
  • Global coverage if there are no countries excluded on your plan

Minimum age: None Maximum age: 85

Payment type: Monthly benefit. Main purpose: Provides an ongoing monthly benefit of 70% of regular income if forced to take time off of work due to accident, illness or major trauma. Key features:

  • Pays until you can return to work or the age of 65 (retirement) if you are unable to return to work
  • Premiums are generally tax-deductible
  • Additional benefits provided to cover rehabilitation expenses

Minimum entry age: 15 Maximum entry age: 65

Payment type: Often lump-sum payment. Main purpose: Provides a lump-sum payment on diagnosis or occurrence of specific illness such as stroke, cancer or heart attack so that you can focus on your recovery. Key features:

  • Can be bundled with life cover policy or purchased separately
  • Most policies cover up to 40 different medical conditions
  • Advance payment for certain conditions
  • Partial benefit provided for some conditions

No age requirements listed

Payment type: Typically monthly payments for short-term or long-term illness or injury during the period you’re unable to work. Main purpose: Provides income after an accident or illness leaves you unable to work to clear debts, cover medical costs and provide a regular stream of income for maintaining your current way of life. Key features:

  • Replaces 50-80% of your income if you can’t work because of an accident or illness
  • Short-term and long-term policies cover benefits for two years, five years or to age 59
  • Most policies include benefits for complete, partial, recurring and specified medical problems
  • Typically monthly payments but lump sum payments are possible, especially for total disability
  • Can be bundled with a life insurance policy or purchased separately

Minimum entry age: None Maximum entry age: 64

Payment type: Lump-sum payment Main purpose: Lump-sum payment (usually up to $30,000) to cover the cost of your funeral. Key features:

  • No medical tests required
  • Choice of coverage between $5,000 and $25,000
  • Many companies offer fixed rates

Minimum entry age: 50 Maximum entry age: 85

Payment type: Lump-sum payment. Main purpose: Provides a lump-sum payment in the event of accidental injury. Key features:

  • No medical or blood tests required
  • Simplified, more affordable form of income protection insurance
  • If covered internationally, insured for accidents anywhere, 24 hours a day, 365 days a year

No age requirements listed

Payment type: Lump-sum payment Main purpose: Provides a lump-sum payment in the event of accidental death. Key features:

  • Affordable form of life insurance
  • No medical or blood tests required

No age requirements listed


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Should I buy insurance from an adviser or straight from the insurer?

Both options have benefits to consider so it really comes down to your own personal preference.

Purchasing coverage with an adviser

  • Access to wide range of products to give you greater choice.
  • Can use their knowledge of the market to help you find coverage suitable for your situation.
  • Can help you assess your situation to determine what type and how much coverage you require.
  • Can offer advice regarding life insurance and annuity.
  • Advice-based products generally offer higher coverage levels and greater range of features.

Purchasing coverage direct from the insurer

  • Usually no medical exams are required on direct products
  • Coverage can be put in place entirely online or over the phone.
  • You know right away if your application is successful.
  • Immediate death coverage once application is received.
  • Direct products are beginning to become more and more competitive – with some coverage amounts up to $15 million.
  • A number of general insurance products are now offering coverage for involuntary unemployment.

I’ve already got life insurance in my retirement plan, is it enough?

Most retirement plans will provide members with a default level of coverage which can be increased, decreased or cancelled altogether. If your employer is making contributions through a 401K, you most likely have a default level of coverage. The coverage provided may be sufficient for your situation, but you need to weigh up the benefits and drawbacks of this option and whether you require an additional level of protection.

Benefits of investing through your retirement plan

  • Generally cheaper as coverage is purchased in bulk.
  • Premium payments may be tax-deductible if paid with pre-tax dollars.
  • Self-employed workers under the age of 75 may be eligible to claim a tax deduction for personal contributions.
  • In some cases, employees can arrange for an employer to make contributions directly to their 401K for an amount that will include the premium of life or disability coverage.
  • Payments are made automatically and directly from your 401K and not your after tax income.
  • Reduced requirement for health checks.

Drawbacks of investing through your retirement plan

  • The types of coverage available are limited.
  • Benefits paid to non-dependents can attract tax.
  • Payment of benefits can be more complicated and drawn out as the benefit is paid to a trustee first who then distributes funds.
  • Coverage is generally more comprehensive and flexible for policies .
  • Coverage expires around age 70 (most policies outside of a retirement plan will continue to provide coverage until age 90 or 100).
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Am I eligible for coverage if…

  • I am a non-US resident? Yes. There are a number of insurers willing to provide life insurance if you are a non resident. You must have a purpose for being in the US, whether it be work or family. Also, you must apply for the policy in the US and be willing to take a medical exam in the states.
  • I am over 70? Yes. Most insurers provide life insurance to applicants up to age 75. There are a number of insurers that offer coverage for applicants up to age 80 or even 90. Most brands will reduce the level of coverage that older applicants are eligible to receive.
  • I have a pre-existing condition? It will depend on the nature of the condition and any treatment you have or are currently receiving for it. The insurer will either exclude the condition from coverage, request you submit more details about the condition or automatically accept it. Requirements for how long ago you experienced the condition will vary between different companies so it can be worth speaking with a consultant to find options suitable for your situation.
  • I work in a high-risk job? Yes. You will probably be required to pay a higher premium for coverage than an office worker – but it is still possible to get coverage. Again, it’s worth discussing your occupation with an insurance consultant to give yourself the best chance of finding an insurer willing to offer competitive coverage for your occupation.
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Don’t want to overpay but don’t want to be under protected?

Here are some tips to get quality coverage that won’t break the bank.

  • Buy young and lock in a competitive rate. Taking out coverage when you are younger and likely in good health means you can lock in a more competitive rate as opposed to when you’re older and more prone to pre-existing conditions.
  • Find out how much coverage you actually need. Take the time to properly assess what will need to be covered in the event of a death or serious injury and how this figure could change in the future.
  • Find out what coverage you already have. You may already have some coverage in place from your annuity or employers 401K program. Find out what you stand to receive in a claim and if extra coverage is necessary.
  • Take the time to shop around. Comparing policies with a consultant from a range of insurers will give you a better chance of finding something tailored to your needs that is well priced.
  • Keep an eye out for special offers. Competition among insurers has resulted in an increase of special offers to help you save further on your coverage. This may include free coverage for the first year, access to health rewards programs and premium discounts.

Still need help? Check out these answers to common questions

Whether you need it
  • A. You may not want to pass on outstanding mortgage debt, personal debt or final expenses like funeral costs to your family and friends. Income protection or disability insurance protects you if you suffer a serious injury and can’t work for a few months or longer.
  • A. Most people are not fortunate enough to have adequate funds invested in a high-interest account that would be enough to cover their outstanding debts and give their family support for the future. With some life and disability claims reaching up to $2 million, it’s a fair amount of cash to just have sitting around!
  • A. Not exactly. Health insurance covers medical expenses that are associated with sickness and injury but does not provide support for bills, debts or loss of income if you can’t work for an extended period or ever again. Life insurance covers the gap between the expenses covered by health insurance and additional costs of ongoing treatment, rehabilitation and loss of income.
Receiving a life insurance quote
  • A. You receive a quote for coverage by calling or going to a providers website and disclosing your personal details. A certified insurance consultant will discuss further or call you to talk about different policy options and provide you with a preliminary quote based on these details.
  • A. Life Insurance and Income Protection are not straightforward types of insurance and the coverage that is available to you and what you will pay for it is greatly impacted by your own personal characteristics. Based on your gender, smoking status, age, type of protection, occupation, income and level of protection required a consultant can provide you with a preliminary quote.

This preliminary quote can then change based on a number of factors including;

  • Any pre-existing medical conditions that you may have.
  • Nature of activities carried out in your occupation.
  • The policy you choose.
  • Style of premium you choose.
  • The policy fee charged
  • A. The insurance consultants that finder.com work with have access to major life insurance brands in the US and may have access to smaller specialist insurance groups as well. You can view the main panel of insurance brands that you can receive a quote for here.
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Applying for coverage
  • A. United States citizens, US permanent residents (those residing in the US at time of application) and non-residents. Age restrictions vary between brands and cover selected.
A. An insurance consultant can help you review your current policy to help you decide whether you can benefit when switching to another option or increasing or decreasing the level of coverage in your current policy.
  • A. Insurers classify anyone that has smoked tobacco or any other substance in the last 12 months as a smoker.
  • A. Yes. Generally, two people can be covered under a single policy. Discounts for multi-policies are offered by some brands.
  • A. No, generally they will be required to take out a separate policy.
  • A. Most insurers will only require medical or blood tests at application if the insured has a pre-existing condition that needs to be assessed further. Additional evidence may be required in the event of a claim.
  • A. It depends on the condition and treatment. Every insurer has different conditions for pre-existing conditions so it is best to check the terms and conditions before taking out cover. If the insurer decides that your pre-existing medical condition presents too great a risk for them, they will generally exclude it from your coverage. As an example, if you are applying for coverage and have a history of back problems, your insurer may exclude all claims related to back conditions from your policy.
  • A. There are generally two options available to you:
  • It might be worth speaking with an insurance consultant to see if there are any other companies out there that are willing to provide you with coverage. Assessment criteria is not the same for all insurers so it’s always worth looking around if you have struggled to get coverage due to a medical condition.
  • You may also be able to have your current insurer review your condition when it comes time to renew your policy to see if the exclusion can be lifted if your situation has changed.
Policy exclusions
  • A. Generally all deaths are covered except for suicide within one to two years of the policy. Accident only life insurance will only provide coverage for death that is the result of an accident. Some policies may exclude death related to pre-existing medical conditions for a set number of years from the start date of the policy.
  • A. Most policies will not pay a benefit for claims arising from:
  • Intentional self-inflicted injury or self harm.
  • Acquiring HIV, AIDS, Hepatitis B or Hepatitis C unless if through performing duties of the your occupation.
  • Disability caused during engagement in armed forces of any country.
  • Claims related to pregnancy, uncomplicated childbirth or miscarriage.
  • Claims caused by your engagement in unlawful acts.
  • Claims from aviation activity unless you are a fare paying passenger on a scheduled flight.
Your policy
  • A. Yes. You can apply to increase or decrease your coverage at any stage to meet your needs. It’s worth noting that you will be required to undertake another round of assessments with your insurer.
  • A. Yes. You can update beneficiaries at any stage.
A. Yes. Most policies offer a 30 day cooling off period whereby premiums paid during this period will be refunded. No premiums will be refunded if you cancel your policy after the cooling off period.
  • A. No. Life insurance is not an investment product and is designed to pay a benefit for death, terminal illness, injury or illness.
  • A. Some do. Policies are out there that provide coverage 24 hours a day anywhere in the world. Countries that have been advised against travel are generally not covered.
Making a claim
  • A. In the event of your death, your life insurance brand or 401K trustee will pay out the nominated death benefit to one or more of your financial dependents or to your estate. A “binding nomination” can ensure the benefit from the coverage in your 401K is paid to the beneficiary of your choice. You should make sure your estate has the necessary documentation so that they can claim on your behalf (see below).
  • A. Generally, the beneficiary will need to provide:
  • A completed claim form.
  • Original policy document and policy schedule.
  • A copy of the deceased’s birth certificate.
  • A certified copy of the deceased’s will.
  • Probate or letters of administration.
  • A. If you claim for injury or illness on a life cover policy, your benefit will be reduced by the amount paid and your premiums adjusted accordingly.
  • A. If you’re premiums are becoming to expensive or if you’re going through financial hardship, there are options to freeze premiums for a short period of time.
  • A. Most policies allow you to nominate up to 5 beneficiaries on your policy.
  • A. The claim will be paid to your estate.
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