5 questions to ask your life insurance or financial advisor
Finding a life insurance policy is an easy task. Many may not even consider taking help from financial advisor. However, the challenge is to choose the right life insurance cover. A suitable life cover can provide the ultimate protection when you need it the most.
Certainly, choosing the right life insurance cover requires a proper research and resources. The objective is to fully comprehend the downside risk. And to protect your family and wealth in case of any contingent event trigger.
Following are some of the vital questions you should ask your financial advisor about life insurance. With research and professional financial advice will ensure a peace of mind and risk protection for your family and wealth.
1. What kind of life insurance should I prefer?
With myriad of options available in life insurance includes term life, income protection, total permanent disability and trauma insurance. Certainly, the suitable type of cover depends on your needs, objectives and financial and other circumstances. To decide what you would like to be covered for is a vital thing. You’ll jump by asking yourself or indeed your financial advisor about what can you do with none of those sorts of insurance?
Life Insurance cover remunerates a payment in the event of death or terminal illness. It may also pay off your mortgage loans and personal debts. Expenses like living expenses for family, funeral costs and other future needs can also be covered. The goal is to ensure that your family remains taken care of financially.
Income protection pays a monthly income stream. Similar to your salary or wages. If you’re temporarily or permanent disabled and unable to generate income from your personal exertion, this protection will cover you. You can cover up to 75% of your annual income to cover your daily living expenses. Whilst you focus on rehabilitation to getting better back to normal life.
Your financial advisor will help you to map your needs and the waiting period. Ask question to determine the waiting period before your first payment. And also for a way long you’re paid (generally termed the benefit period).
Total and permanent disability (TPD) cover
TPD pays a lump sum payment in an unfortunate event when you become total permanent disable and unable to work.
Your financial advisor will help you to choose the right cover based on your needs and circumstances. The TPD policy covers your out-of-pocket and ongoing medical expenses and pay off your personal debts. It may also pay off your home mortgage, any home modifications or paying to the carer of dependants if needed.
Critical illness or Trauma insurance pays a lump sum payment. Illness such as a stroke or heart attack or certain cancers etc. Trauma policy provides protection and underpin some financial support when you become critically ill. Or, you may require a time off from your normal work duties due to serious injuries.
Your financial advisor can help to choose you the right trauma cover. It will provide some degree of financial freedom while you focus on rehabilitation and well-being.
A financial advisor can explain the difference among the insurance policies. He will run down an insurance comparison of the related product features. Also get you a quote to choose the right cover for you and your family.
2. How much cover do I need?
Quantifying your financial advice needs assessment is must. Particularly, when it involves personal advice specially life insurance. At a certain scale everyone has different needs. To identify your priorities and proportionate the cover, you’ll require a good conversation with your financial advisor.
Take help from your financial advisor to determine an appropriate reasonable cover amount. It means the cover that’s not insufficient and within your affordability. This personalised and in-depth assessment are going to support your personal circumstances including your total loan position.
The cover amount should factor in your major liabilities. Such as, mortgage debts, investments, personal liabilities, assets including super and real estate property. Moreover, it may include your other need like education and childcare expenses etc.
3. How much will my cover cost?
Cost is a vital factor when it comes to life insurance. It may depend upon the type, features, benefits etc. Further, its limitation and the level of cover you would choose. Figure out the future value against the price.
4. How long do I need to be protected for?
The future is uncertain. We don’t have a crystal ball to predict future. Therefore, it is important to plan ahead your future needs to avoid unpleasant surprises.
Certainly, life insurance protection needs varies from time to time. Indeed, it gradually decreases as the risks and the responsibilities reduces with the passage of time . Therefore, review your life insurance protection with your financial advisor. Check the appropriateness of any existing risk protection strategy.
5. What things to lookout when buying life insurance?
Human life is the most difficult and complex thing to underwrite. Therefore, don’t pretend that the life insurance purchased through online or from a comparison site is the cheapest one. Or they can offer the best cover inevitably. Don’t rush to decide. And always take a professional advice before taking any action.
You need to speak to the financial advisor about your financial circumstances, needs and objectives to understand the appropriateness of the life insurance cover. The cover that matches your needs, objectives and goals and circumstances.
Consider the different parameters may impact on your cover choice. For example, your medical history, pastimes and the occupation. A full disclosure is very important to get a suitable protection and price to pay for. So that, when it comes to claim you have a peace of mind with no surprises.
Fully medically underwritten policies generally are cheaper in long run. As it generally encompasses all your risk factors. Mostly general insurance policies do not fully medically underwrite your policy. You may not find issues until the claim time arrives.
Finally, you must read the policy document and Product Disclosure Statement (PDS). At least, check the features that are important to you in the policy synopsis.
Would you like to know more?
*The above information provided is general in nature. It is not to be relied upon as personal financial advice. As it has not considered your personal circumstances, needs or objectives.