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Life Insurance 101

Life Insurance 101

If you’ve made a big life change recently, such as buying a house, had a child, or changed your career path, you may have found yourself wondering about life insurance.  

Admittedly it’s not the most interesting topic of conversation to have with your family and friends, so to help answer some common questions, we’ve put together a “Life Insurance 101”. 

What is life insurance?

It’s sort of ironic that it’s called Life Insurance when it generally doesn’t pay out while you’re still alive.  Basically, you pay a regular premium (monthly, quarterly or annually) towards an insurance policy that is released to your family or estate when you die.  Some policies can pay out when you’re diagnosed with a terminal illness. 

When you apply for life insurance, you’ll have to fill in a detailed questionnaire about your health and lifestyle.  Depending on your answers your policy might start straight away, or the underwriters may want to ask you a few more questions.

It’s really important that you answer these questions honestly and in full.  If in doubt, don’t leave it out.  If you don’t disclose something when you apply, even if you don’t think it’s important, later on your insurer can decline a claim and/or cancel your policy.   

Do I need it now?

It depends on your circumstances, but there are benefits to doing it sooner rather than later. First of all by signing up for life insurance now, you can rest easy, knowing your loved ones will be looked after when you pass away. When the inevitable happens a lump sum could be paid out to your family to put towards paying off your mortgage or any other debts.  

When you apply your state of health can impact on the premium you are quoted. But, if you already have insurance, and subsequently develop a new medical condition, it will be covered automatically and you won't need to tell the insurer. This means it's a good idea to get life insurance before age takes its toll on your health, and your insurance premiums.  

Who needs life insurance?

Short answer - it depends.

If you have a family and a mortgage you probably should be thinking about life insurance.  Many people apply for life insurance when they’ve made a major life event, such as buying a new house, having a baby or starting a business.

Events like this have massive financial impacts on your life, so you should be considering what would happen if you died.  Questions like “How would your wife/husband/partner cope financially without you?”, “Would they have to give up work?”, “Who’d pay the mortgage?”.  

How much does life insurance cost?

It completely depends on your circumstances – your age, health and amount of cover you need.  It also depends on the insurance policy, because they don’t all cover the same things in the same way.  But, as an example, with Countdown’s Life Insurance a healthy non-smoking 35 year old female with $400,000 in cover could pay as little as $9.30 a fortnight (underwriting conditions apply).  

You can use an online calculator to estimate how much cover you might need, and you can also get an indicative quote online.     

Where can I buy it?

It’s good to shop around to compare life insurance quotes and what you could be covered for.  You can apply through a broker, with your bank, or directly with a provider like Countdown Insurance.  With Countdown you can get a quote, and apply if you’re ready, online or over the phone on 0800 99 77 00. 

If you have any further questions or require more detailed information about life insurance, take a look at the Countdown Insurance website and Policy Wording.  Or you can call us on 0800 99 77 00.

At the end of the day, life insurance gives your family protection against the unknown and it ensures that your family can still get by without you.