Term Life Insurance
Term life insurance is the only type of Life Insurance offered in Australia. It pays a specified sum of money to the insured's beneficiaries or estate as long as the insured passes away while their policy is current. In exchange for the term life insurance policy, the insured agrees to pay monthly or yearly premiums to the insurer.
Most of the standard term policies expire at age 99; however each insurer may have slightly different definitions. When in doubt, make sure you consult the products disclosure statement (PDS).
Select Term Life Insurance
The second life insurance type is Select Term Life Insurance. This type of cover pays a lump sum on the insured's death, terminal illness or total and permanent disablement during a selected fixed term of 5, 10 or 15 years.
Money-back Term Life Insurance
Money-back Term Life Insurance is the third type of cover in Australia. Generally speaking, this type of policy is most suitable for people who are in a particular situation and find it difficult to get cover. For example, Money-back cover may suit those with a medical condition like severe diabetes.
Money-back Term Life Insurance is as close as you can get to Whole of Life Insurance, however Whole of Life insurance is no longer available in Australia. Money-back Term Life Insurance pays a lump sum, equal to 100% of the total premium paid, at the benefit expiry date provided:
- Premiums are paid in full when due,
- No terminal illness benefit has been paid, and
- No death benefit has been paid.
Please note that Money-back Term Life Insurance policies were taken off the market in 2009.
Determine how much term life insurance you need
Apart from choosing the right policy to suit your needs, determining how much cover you need is a very important step. It is the amount paid upon your death, and is decided when the policy is taken out. Generally speaking the main rule of thumb is to take out a policy that is ten times your annual income. This value usually relates to your current and future liabilities, and the amount of income you generate. You may find it helpful to get advice from an xLife adviser. We will typically assess your:
- Debts - mortgage, credit cards, loans.
- Expenses - daily living expenses and future expenses like education for your children.
- Ongoing income needs of your family.
If you failed to purchase a term life insurance policy for the right amount, would your family be able to financially cope if you weren't there?
Compare term life insurance policies
Insurers take into account your age, gender, smoker status and health history before determining your premium. So if you need help in finding the right type, and the right level of cover, contact xLife for your term life insurance quotes today.
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