Life insurance

Peace of mind knowing you’re looking after those you leave behind

Life insurance - walking the tight-rope

Life insurance can help ensure your loved ones are looked after during the hardest of times. Your life insurance policy (often called life cover) will pay out a ​lump sum if you die or are diagnosed with a terminal illness. This is so that:

  • Your spouse will have enough money to replace your income for a while, pay for your funeral, and look after your children
  • Your family can pay off the mortgage and any other debts or commitments
  • You can leave an inheritance or donation
  • You can create an investment that generates income for any purpose you decide.

Choose your beneficiary

You decide who will be the beneficiary of your policy. You can change this person or persons whenever you like. If you don’t choose a beneficiary, the proceeds will be paid out in accordance with your will.

Life insurance provides a 100% tax-free lump sum

In the event of your death, life cover policies will pay your chosen beneficiaries a one-time tax-free payment. Most policies will also pay you the full benefit if you are diagnosed with an illness that will be terminal within 12 or 24 months.

It's important to note that although life insurance can be used to replace lost potential income, life insurance benefits are paid at one time in a lump sum, not in regular payments like wages.

Funeral costs

Nearly all life insurance policies provide a sum almost immediately to cover expenses related to your funeral. At a very stressful time for your loved ones, this relieves one small cause of stress.

Can I purchase life insurance online?

Many insurance companies now provide the ability for you to purchase life insurance online. In most cases, this is not a very good idea owing to the following reasons:

  1. Research. When compared with other types of insurance, life insurance is usually a straightforward category of insurance, as most life insurance policies have similar features. Even so, it still pays to conduct plenty of research before establishing any cover. This is because insurance policies are legal documents filled with fine print containing plenty of jargon. To ensure you don’t get an average insurance policy that excludes several areas, there needs to be deliberate research, analysis, and comparison of comparable policies. This will enable you to find the most suitable and cost-effective policy.
  2. Inaccurate information. Whether purchasing life insurance on or offline, the first step is completing the policy application form. When filling forms online, you do not have a guide to assist you, including overseeing the accuracy and completeness of your details. Therefore, you need to be extremely careful to ensure all the details entered are accurate and leave nothing out. An insurance company can outright reject a claim if it later comes to light that key information provided is incorrect or is missing something (such as regarding medical history). There may even be fraud allegations if the policyholder has omitted, lied about, or hidden key facts. This is certainly not what your dependants want to deal with at such a stressful time. Moreover, since it is an online policy, a grieving family cannot even get an adviser’s support to fight their case.
  3. Too much cover. When many people find out just how economical life insurance can be, the temptation is often to purchase far too much! In this case, the extra cover becomes a total waste of hard-earned money, especially as some insurers will sign customers up for cheap policies for the first year or two then make rapid increases to the premium (regular payments made to the insurer for the insurance) as they know people are less likely to change policies even when the premiums increase.
  4. Not enough cover. In direct contrast to above, many people take insufficient cover as they fail to properly analyse how much cover they truly need. Key factors when considering this area include your; budget, dependants, assets and liabilities, commitments, and income. Also keep in mind the slow increase of inflation, as over future years this will steadily erode the real value of any insurance policy established today.

How can an insurance adviser assist?

Our Authorised Financial Advisers - in this case commonly called insurance brokers - can assist by helping you avoid the four pitfalls listed above. Here are some other advantages offered by exploring life insurance with an adviser from Milestone Direct:

  • You have a guide through the process.
  • Most often, save yourself money. This is because our advisers have great insurance market knowledge, so know which policies should be avoided for being far costlier in the long run (such as those mentioned above which charge a cheap rate initially then rapidly increase the premiums). Using industry-leading comparative tools an adviser can connect you with the best policy to most economically meet your needs.
  • Understand the fine print which occurs with all insurance policies.
  • Your loved ones will have support and assistance if a claim is made. This reduces the stress at a such a difficult time, providing your family with the ability to grieve. Arguably, this is the biggest advantage of working with an adviser.

You can also gain confidence knowing that Milestone Direct aren’t an insurance provider and aren’t owned by one (unlike some financial advice firms). This is one reason why you know your interests are being put first. Another is that our advisers are all paid a salary instead of commission. They also have no incentive to promote one product over another.

What if you already have life cover?

As is the case with other insurance policy types, the level of cover a person needs can rapidly change depending on life events, including births, marriages, separations, increases or decreases in debt such as a mortgage, increases or decreases in income, and other employment changes. These personal factors combine with the constantly improving nature of the insurance market to mean that yearly reviews of your levels of existing insurance are a necessity. Please contact us if you would like to review your current policies.

What next?

With the wellbeing of your loved ones at stake, what have you got to lose by making a phone call to check your situation? For a free, no obligation chat with an adviser about life cover options for you or your spouse, call 0508 MILESTONE (0508 645 378) or leave your details below.