You’re probably sick of talking about COVID-19 but whether we like it or not, the pandemic has now become a part of our lives and it’s got many people thinking about the value of life insurance.
What if you pass away unexpectedly? Your loved ones don’t just lose you; they also immediately lose your income and all future income that you would have generated. Will they be able to support their ongoing living expenses? Can debts be covered? Can your lost income be replaced?
If the pandemic has made you think more about life insurance, these tips should help!
Don't procrastinate
Life insurance certainly eases the stress that grief, coupled with a loss of income can bring so if you’ve been considering getting life insurance, don’t put it off. It’s best to sign up for life insurance as early as possible while you are still in your insurable years. The older you become, the greater the chances are that your health deteriorates and as a result, the more expensive it will be to secure insurance. It’s important to note that insurers may not offer cover at all or may increase the premiums if you have already had health issues. So, get your insurance while you’re younger.
Focus on value rather than price
Price is usually one of the biggest driving factors in purchasing decisions but when it comes to life insurance, make sure you look beyond just the price. Policies can differ between providers, and the lowest price isn’t always the best option.
As advisers, it’s our job to review both the companies and policies best suited to you and ensure we’ve covered off everything you need to know to make the best decision for you and your loved ones’ benefit. A good adviser will ensure all your concerns are addressed so you can make an informed decision before you sign the papers.
The finer details
It’s important to know what you’re signing up for when committing to a life insurance provider. There are a few things you’ll need to consider, including who should own the policy. Is it the bank you borrow from, your spouse, your children, yourself, your trust, or a mixture of different people? No idea? We can advise you on how to set up ownership of your policy properly.
It’s important to note that Kiwis don’t pay tax on most life insurance payments you or your estate receive from illness or death. This makes it easier to calculate how much cover you need knowing you’ll receive the full amount. If the cover is also part of estate planning and succession plans then take inflation into account as that could make a large difference in the future.
Also think about how long you’ll need the cover. That may sound obvious but consider, once your mortgage is paid off, your children are independent and you’ve retired, do you still need to have life insurance waiting in the wings? On the other hand, if you’re just starting out and foresee needing life insurance long-term then making the premiums stay the same for a period is perhaps the best option. This helps with budgeting and stops the unknown increases each year which get larger and larger as you get older. You can level premiums for 10 years all the way up to age 100. Again, this is where an adviser can help.
Don't allow premiums to lapse
Most insurance companies allow a grace period before your policy lapses if you are unable to make your payments. If the premium isn’t paid, even during the grace period, the life insurance policy lapses and you will no longer be covered which means no death benefits regardless of how long you’ve had the policy before.
Some insurance policies offer a revival feature where a lapsed policy can be ‘revived’ if that is what you wish to do. This usually means additional charges will be applied and a medical examination may also be required before the policy is reinstated.
The best thing to do to ensure that your policy doesn’t lapse is to sign on with an insurance adviser. It’s part of our job to ensure that your policy is up to date, and we communicate any renewals or changes with you.
Whatever you decide, a life insurance policy is almost always a good decision because no one lives forever. When your time comes, make things that little bit easier on your loved ones.
For more tips and advise please email or call us.