Life insurance companies have a legal obligation to
clearly inform you about all the terms & restrictions
in the life insurance policy prior to the person
entering into the contract. This includes the insurer
providing you with a copy of the policy document and
product disclosure statement, both of which are to be written
in wording that is clear and unambiguous. Once you
have entered into an insurance agreement, the life insurance company is
also obliged to inform
you in writing prior to the policy expiring,
irrespective of whether
the insurer wants to enter into a new policy or not.
If you decide to apply for life insurance, you are required to
provide the life insurance company with all the
information about you that may affect the risk you are
asking the insurer to accept. This is referred to as
your “duty of disclosure” You need to ensure you understand
the question being asked and provide accurate answers
which truly reflects your situation. This
information is critical for the insurer to understand the risk you are asking them to ensure. If
you don’t understand what is being asked, please refer
to your
insurance broker or the life insurance company directly.
If you do not answer the
question fully and accurately, the insurer may be
entitled to refuse any claim you make.
Be prepared to undertake a medical examination prior to
the life insurance company accepting your application to be
insured. The results of your exam and your completed
questionnaire will be used during
the underwriting process and in calculating your final premium.
Changes in terms of the policy
Life insurers can change the terms of the policies
from time to time. They are obliged to inform you in
writing and give you an opportunity to review the
changes and possibly seek cover elsewhere.
Life insurance company ratings
Not all life insurance companies are equal.
It is essential
that you deal with a highly rated company to ensure that
your claim will be paid should you or your relatives
need to make a claim. Talk to
your life insurance broker for more information on the
rating of different risk providers.
How much life insurance cover
do I need?
The purpose of
life insurance is to provide your dependents with
a sum of money sufficient to pay out your debts and/or
to provide an income sufficient to support your family
for a period of time - usually until your children
are 18 years old. As everyone's situation is different,
the level of life insurance cover required will vary.
Most financial advisors will recommend that you have
life insurance cover equivalent to a minimum of 10
times your average annual income.
Disclaimer
This web site is not designed to provide personal
financial or investment advice. The information provided
is general in nature and does not take into account
your particular investment objectives, financial situation
or investment needs. We recommend that you speak to
a licenced financial advisor or life insurance broker
before you make any decision regarding risk insurance.
