Life insurance covers are offered online to buyers in Australia who are interested in insuring either themselves or their income. Buyers who are interested in purchasing one of the many plans available online can do so, by paying the selected insurer a premium either once a month or annually. There are a few important factors that go into deciding the cost of these policies and these factors are mentioned below.
Type of Contract
Indemnity contracts are cheaper than agreed value contracts and that is a fact. The reason indemnity contracts may cost you a few dollars lesser than agreed value contracts is because, agreed value contracts come with more benefits and fewer restrictions.
Indemnity contracts pay out the compensation payment in accordance to the buyer’s income when he files a successful claim. However; agreed value contracts pay out the compensation payment in accordance to the buyer’s income when he applies for the policy.
Age and Sex of the Buyer
As a general rule, the younger you are the more likely you are to get a cheaper policy however; there may be some exceptions to this rule. If you are a young adult but have genetic or pre-existing health conditions then you may be required to pay higher premiums.
Most insurers offer women cheaper policies compared to men of the same age due to the simple reason that is studies indicate that women are low risk buyers as compared to men. It should be noted that there are exceptions to this rule and women who smoke or consume high levels of alcohol every week may be considered as high risk buyers only because these substances have effects on one’s health which can cause the buyer to file claims for compensation.
Occupation and Health Status of the Buyer
People who work in offices, have desk jobs, travel occasionally for work and who do not work in the field are considered to be low risk buyers. Low risk buyers are offered cheaper policies compared to high risk buyers who work in the field, have dangerous jobs, work in hazardous environments or travel frequently for work related purposes. Buyers who have one or more pre-existing health conditions or known genetic conditions may be considered as high risk buyers by some insurers. The nature of the illness or genetic condition will determine the final cost of the policy.
Extra Curricular Activities and Habits
If you travel frequently by air for leisure or if you play rough sports then you may be asked to pay higher premiums, agree for exclusions or pay premium loading fees. Driving a race car or a sports bike may also get you classified as a high risk buyer. People who smoke will be asked to pay higher premiums compared to non-smokers. Some insurers even offer discounts, deals and promotions for non-smokers and these deals allow the buyer to get more benefits or get a cheaper policy.
Insured Amount, Your Financial Status and Additional Benefits
Although the factors mentioned above influence the insurer’s final decision regarding the premiums you will have to pay; buyers should remember that the insured amount they choose, their current financial status that is debts, commitments and assets along with additional benefits chosen with the policy will play an important role in determining the final value of the policy.
Usually the higher the cover level the more you will have to pay towards premiums and the more the paid benefits the higher the premiums will be. If you have 2 or more financial commitments and if you have limited assets or no assets then you may be considered as a medium to a high risk buyer. Add on benefits that may be offered for free include the 24 hour worldwide cover, the accommodation benefit, the transplant surgery benefit and the death benefit.
Add on benefits that may be offered for a small fee include the day one claim or day one accident benefit, the indexation benefit and the guaranteed renewability benefit. Add on plans that may be offered for a small fee include trauma insurance plans, TPD plans, personal accident insurance plans and income insurance plans.
Funeral insurance may be offered as an add on plan with term life covers. Similarly income insurance plans may be offered as an add on plan with term life covers.
Life insurance for High Risk Buyers
There are a few ways you can get affordable policies to help you protect your and your family’s future. To begin with, understand your own needs purchase a policy that suits your needs, do not opt for the cheapest policy you find since such policies have exclusions or limitations, read the terms and conditions of the cover and read the product disclosure statement that you will be given when you purchase a policy.
In addition, compare plans by using free services of insurance comparison websites, take a day or two to think over your choice of insurance and insurer, look for deals offered on insurance agent and insurance comparison websites and last but not the least opt for a tax deductible policy since this can work out beneficial in the long run.
It is important to note that exclusions and premium loading fees are not always a bad thing; however before you decide to opt for these methods to lower premiums, talk to a financial advisor and assess your own level of risks.
Life Insurance for Low Risk Buyers
If you are a low risk buyer then life insurance plans such as term life covers or income insurance covers will be affordable and can be even cheaper if you are a non smoker and opt for the deals offered by insurers.This being said, even low risk buyers should make it a point to compare plans online before deciding that the cheapest plan is the best one for them.
Remember, insurance can be considered as an investment towards yours and you family’s future that will pay for itself when the times are tough and when you need financial help from the selected insurer.