source:SEIATo many, life insurance seems stupid. Why pay for something you will never see. With many life insurance policies the only benefit received is a lump sum payout on death. It is understandable why many people take that viewpoint. The very best life insurance policies though give you and your family piece of mind, give you benefits while you are still alive and can be essentially free. Here are some secrets that you should know about so you can get the very best life insurance.
Pay for it with your super
In Australia , 9% of your income automatically goes to your superannuation. This fund cannot be spent until you retire but it can be used to prepare for your retirement. The money can be invested or used for insurance.
Use the 9% you cannot touch to pay for your life insurance. As life insurance premiums are small it will not impact your final return greatly. If you wish you can use your disposable income to pay for your life insurance but why. You may as well use money that doesn’t contribute to your daily income. This way your life insurance is essentially free.
Make sure it covers additional costs
The main problem with life insurance lump sum payouts is that all costs associated with death are deducted from this lump sum. This ultimately erodes any return your beneficiary will receive. The very best life insurance policies have allowances for funeral costs or body transportation or any other cost associated with death. Some policies even cover solicitor’s fees for executing your will. Some of the better life insurance policies will have an extensive list of extras that could be worth thousands of dollars. This will ensure that you give your beneficiary the full lump sum amount you had intended.
Start young
Insurance premiums are based on risk. What are the chances of a 20 year, white collar male of dying before a 55 year old, blue collar male? Low. This is why when you start contributing to your life insurance when you are young the premiums are very low.
This will also help you in the long run as most life insurance companies have rewards for long term policy holders. If you start at 20 years old you only pay a very small premium. Your premium will be higher at 30 but if you started your policy when you were 20 you will receive a further discount of anything up to 25% which will reduce your premiums to the amount you were originally paying.
Pre-death payouts
Many life insurance policies only pay out once and that is after you die. The better life insurance policies also offer Total Permanent Disability cover so if you are diagnosed with a terminal illness or become permanently disabled you are entitled to your life insurance payout. Some policies will even cover ongoing costs for a year before they issue a payout. The financial burden of disabled care can be extraordinary so this kind of benefit can be worth hundreds of thousands of dollars.
