Avoid common life insurance mistakes
Taking out life insurance can be confusing and stressful, so it’s not surprising that some people end up with cover that may not be right for them… Brought to you by NobleOak.
With inflation at a 20-year high, rising interest rates and continued uncertainty over global markets, cost of living pressures are being felt by Australian families and small businesses.
Household budgets are squeezed, so the temptation to reduce insurance premiums can be extreme, but making savings on policies such as life insurance can create a false economy that comes with unnecessary risks, according to NobleOak, the Australian life insurance partner of the CA ANZ Member Benefits Program.
“In disrupted, unpredictable times, it’s understandable to want to save money,” NobleOak head of underwriting Phil Hill says. “Life insurance is a daunting area where it’s easy to feel overwhelmed with so many options available, but it’s important to consider your options before you make cut backs that you may regret later.”
NobleOak has outlined the five of the most common mistakes that Australians sometimes make when taking out life insurance.
1. Skim reading the policy documents: No one likes ploughing through endless terms and conditions, but it’s important to pay attention to any exclusions that may affect claims.
2. Limiting cover to death: A life insurance policy can protect against more than just loss of life. For example, if an individual has a family, they can choose income protection cover to help protect against income loss from serious injury or illness. They may also consider total and permanent disability cover in case they are seriously injured and unable to work again.
3. Procrastination: Young people may think they’re not going to need life insurance for a few years, but putting it off can backfire. “The younger you are, the healthier you’re likely to be and that can have important implications by way of cost savings on future premiums,” Hill says.
4. Focusing only on price: Understandably, people are looking for something they can afford. Someone with an average monthly income and three kids may not be able to afford life insurance right away. “Focusing on the real ‘value’ of a policy can be just as important as the price,” Hill reveals.
5. Having no plan: Before investing in life insurance cover, it’s most important to know exactly what the potential payout will have to fund. It could be to pay off a mortgage, cover the children’s school and university fees or provide enough for a partner’s retirement. “If you don’t fully consider what it’s intended for, you may find yourself underinsured,” he says.
6. Failing to make updates: A divorce, new baby or spouse’s death will affect the nomination of beneficiaries, so it’s essential to update the policy as significant life events happen. And when the children have completed their education, it may then be appropriate that the sum insured could be reduced. It’s about thinking through life’s changes as they occur and considering whether the amount of cover is aligned to your different stages.
Find out more:
NobleOak provides special offers to CA ANZ members. To get a quote, visit www.nobleoak.com.au/charteredaccountants or call the NobleOak team on 1300 041 494 and mention ‘CA ANZ - Chartered Accountants’.
Important information – Please note, cover available to Australian residents only. The Target Market Determination for NobleOak’s Premium Life Direct insurance is available at www.nobleoak.com.au/target-market-determination NobleOak Life Limited ABN 85 087 648 708 AFSL No. 247302 issues the products. This information is of a general nature only and does not take into consideration your objectives, financial situation or needs. Always consider the Product Disclosure Statement (PDS) (available at www.nobleoak.com.au) to see if the product is right for you.