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Life Insurance

The value of life insurance

02 Jul 2024

Life Insurance by Life Stage

The choices you make today can impact your long-term health, wealth and happiness. Understand the important role Life Insurance can play in key life events.

James Marshall, Head of Affinity Partnerships – NobleOak Life

Many of us are familiar with the benefits of health, car, home and even travel insurance. But life insurance can also be an investment for you to consider, which may provide financial security for you or your family if the worst was to happen. So, why not take the time to learn a little more about life insurance, what it entails and the choices you would face in your journey to buy life insurance?

Why could life insurance be important for you?

Reaching significant milestones in your life, such as getting married, starting a family, or purchasing a property may be ideal times to consider the value of life insurance and start your research. Regardless of where you are in life’s journey, having life insurance will help give you and your loved ones, financial peace of mind.

Life insurance for many is a financial safety net that would help you, or your family get back on their feet during a difficult time and can also serve as a tool for greater long-term financial security. Life insurers are highly regulated in Australia, and they play an important role in providing customers and their families with the confidence that they will be supported if life takes a turn for the worse.

Although the unexpected occurring is something you may not like to think about, ensuring you have financial protection in place will allow you to focus on the things that are important, such as your family, and enjoying the lifestyle you work hard for. Depending on the cover type you choose, a life insurance lump sum cash benefit would be there for you if you were seriously ill or injured and unable to work, or worse still if you were to pass away.

Life insurance can be tailored to your personal circumstances and budget

Life insurance may be available through an arrangement that has been sourced via your superannuation fund, or it can be purchased directly from a life insurer, such as NobleOak.  Some of the benefits of life insurance through your superannuation are that premiums are paid directly from your super balance which means you don’t have to pay from your take-home income and superannuation funds may be able to provide insurance premiums at a lower cost due to the bulk number of policies they purchase.

However, there are some possible drawbacks of life insurance through superannuation. Firstly, you might be underinsured. The Rice Warner ‘Underinsurance in Australia 2020’*report indicated that there is an insurance gap between how much cover many Australians have through super, and how much they may need. The report stated “the median default cover of superannuation funds meets approximately 65% to 70% of basic level death cover needs for average households but a much lower proportion for families with children.” Also, your retirement balance may be affected. When premiums are paid from your super fund, this can mean less money invested over time towards retirement. The Productivity Commission** estimated in 2018, the negative effect of insurance premiums can range from a 14 -25% reduction in retirement balances for those on low income or doing intermittent work.

If your occupation allows you to access life insurance through superannuation, it is up to you to decide if you wish to purchase life insurance directly or through your superannuation.

Most life insurers also offer different types of life insurance covers that serve distinct purposes. It’s important that you take the time to learn about all the cover types that are available and consider your personal circumstances and budget so you can tailor your policy to make sure it’s right for you before you apply.

With most Australian Life Insurers, the main types of life insurance protection include Life (death), Income Protection, Total and Permanent Disability (TPD) and Trauma. Depending on your circumstances and budget, you may choose to purchase one cover type only, or combine two or more covers within a policy. Many life insurers, such as NobleOak, allow you to purchase directly from them (online or over the phone), without having to go through a financial adviser.

NobleOak’s Life insurance calculator can help guide you as to the type and amount of cover you may wish to consider if you’re unsure what may be most relevant for you.

Choosing the right life insurance policy involves careful consideration of both personal and financial factors. You may wish to consider things such as your age, the amount of debt you hold, and the lifestyle you and your family are accustomed to in determining the type and amount of cover that may appropriate for you.

How do you choose your life insurer if you decide to buy directly?

You may wish to select a life insurer based on their approach to ‘underwriting’, which is a process life insurers use to assess the risk associated with covering you. Some life insurers don’t ask many questions when applying for a policy, which could result in a higher premium as risks are calculated across all of those applying rather than the individual being assessed on their actual risk based on their circumstances.  Others, such as NobleOak, request a few minutes of your time to ask a series of health and lifestyle questions so they can learn more about you when you apply. This is referred to as ‘fully underwritten’ cover.  Most life insurers who underwrite using this approach will also arrange and pay for a medical if that’s required to get everything sorted. Many Australians who apply for life insurance may prefer this approach, as their premiums are calculated more accurately, and the customer is clearer on what they are covered for in the event of a claim.

Choosing a reputable life insurer, such as NobleOak, is key. When doing your research, you may wish to consider the industry and consumer awards the life insurer has received and look at what current customers say through review sites such as Feefo and Google Review. Reading these reviews is a great way to learn more about the company, and to ensure that you’re in reliable hands if you become a policyholder.

Find out more about life insurance by visiting NobleOaks’ FAQ life insurance page:

Frequently Asked Life Insurance Questions | NobleOak

General Advice Warning

Disclaimer: Any financial product advice is general in nature only and does not take into account your individual circumstances, objectives, financial situation, or needs. Before acting on it, please consider the appropriateness of the information, having regard to those factors. Any third party websites or tools referred to are subject to their own terms and conditions and NobleOak Life Limited makes no representation or warranty as to any information on those websites. Persons deciding whether to acquire or continue to hold life insurance issued by NobleOak Life Limited should consider the relevant Product Disclosure Statement and Target Market Determination for the product. NobleOak Life Limited ABN 85 087 648 708 AFSL 247302.

*https://www.ricewarner.com/new-research-shows-a-larger-underinsurance-gap/

**https://www.pc.gov.au/__data/assets/pdf_file/0017/232352/superannuation-assessment-insurance-supplement.pdf

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