Life insurance policies work in much the same way as home or car insurance options. However, life insurance products have been designed to protect you instead of other assets.
How Life Insurance protects you and what it covers
When purchasing life insurance, you will be required to pay a monthly premium. In the event that you die, become ill or are permanently disabled, your insurance company will pay a cash lump sum out to you.
Life insurance is available as four different options, namely, Life Insurance, Income Protection Insurance, Total and Permanent Disability Insurance and Trauma Insurance. Each of these insurance products will provide you with either a regular monthly income or a cash lump sum if you die; are diagnosed with a terminal illness or are injured to the point where you are no longer able to work.
What will my Premiums Cost?
The cost of your insurance premiums will depend on the type of policy you purchase, which company you buy it from and the type of risk the insurance company deems you to be. In most cases though, premiums are generally affordable. For instance, a non-smoking 35 year old woman will be able to obtain life insurance of $500,000 for around $25 a month, while a 35 year old non-smoking man would pay approximately $30 for the same coverage. The premiums can be paid yearly, half yearly, and quarterly or monthly, depending on what will be most suitable for your budget.
Why Insurance Companies Assess your Risk
Anyone who is fit, healthy and works in a low risk job is most likely going to be a far lower risk than a person who is obese, older and who has a job considered to be a high risk occupation like a pilot or construction worker. The lower risk you are deemed to be, the lower your life insurance premiums will be. When applying for any life insurance, you will normally be asked a few basic questions that will enable the company to assess the level of risk you pose. This underwriting process is more to help insurers provide you with the correct cover at the most affordable price possible. Only in exceptional cases will an insurance company require more information from you than normal.
Will Insurance Providers Always Perform Risk Assessment?
This will not always take place, as not all policies are underwritten. If you have a life insurance policy through your employer or super fund, the insurance company may not always decide to assess risk for each person forming part of the policy. In cases like these, the risk will be spread across all members forming part of the policy. This is what is known as a Group Policy.
If you are feeling overwhelmed at the thought of trying to choose the right life insurance policy for your family’s needs, contact our team here at Find Life Insurance today. They are always more than willing to sit down with you to explain the various options that are available.