Choosing the best life insurance policy

Once you’ve made the decision to protect your family with life insurance, one of the next tasks is to choose a policy.

Most life insurance policies are fairly similar, but there can be important differences between the policies that will determine which is best for you.

So what do you need to consider when choosing a life insurance policy?

Premiums

One of the first things many people will look at when taking out life insurance is the premium. The premium simply refers to the amount you must pay for your insurance.

Premiums for life insurance are generally fairly similar between the different insurance companies, however there can be cases where the premiums will fluctuate for various reasons.

When comparing life insurance it is important to find a policy that provides affordable premiums, but it is also important to choose a policy that will properly meet your needs and objectives rather than simply being the cheapest.

Features & Benefits

The main feature of life insurance is fairly standard across all policies, in that they will pay a lump sum to your family or chosen beneficiaries in the event of your death. Whilst all policies are fairly similar at a basic level, there are certain features and benefits that can set them apart from each other.

In addition to covering death, the majority of policies will also payout in the event that you are diagnosed with a terminal illness. The definition of a terminal illness can differ between insurers, but generally it is considered to be an illness that leaves you with a life expectancy of less than twelve months.

Most policies issued by the major insurers will cover suicide, however it is important to check this feature, especially when using a lesser known insurer. Where suicide is covered there will generally be an exclusion period during the first thirteen months where it is not covered.

Another popular extra is the accidental injury benefit. This option does vary between the insurers who offer it, but generally it provides a portion of your life insurance benefit if you suffer an accident which leaves you with serious injuries but does not kill you.

The Insurer

There are a number of insurance companies offering life insurance in Australia. Many of them are household names, but there are a number of lesser known companies who have entered the market in recent years.

All companies offering life insurance in Australia are regulated by APRA (Australian Prudential Regulation Authority) which requires all insurers to hold sufficient levels of capital to pay their claims. This helps to give peace of mind knowing that your chosen insurer has the financial strength to pay your claim if and when the time comes.

Aside from their financial ability to pay claims, you also need an insurer that has a good reputation for paying out claims in a fast and fair manner. The last thing you want is for your family to be fighting with the insurance company when they should be supporting each other through the grieving process.

Choosing the Right Policy

The right life insurance policy for each person will vary depending on their own unique needs and objectives, but overall you should be looking for a policy that provides the features and benefits you need, a premium that gives good value for money, and all with a name that you can trust.