Life Insurance

Life Insurance typically provides a lump sum in the event of the insured person becoming terminally ill or passing away.

What is Life Insurance?

Term life insurance provides a lump sum benefit if the insured person dies. The benefit is paid to the owner of the policy if they are different to the life insured. If the owner is the same as the life insured, the benefit is paid to the nominated beneficiary, or the insured person’s estate.

Term life insurance typically also provides a lump sum in the event of the insured person becoming terminally ill. The insurance provider will generally make a lump sum payment of up to 100% of the insured amount if the insured person is terminally ill. A person is usually considered to be terminally ill, if they have been diagnosed as having less than 12 months to live. Any payment made for terminal illness will reduce the death benefit payable.

Some life insurance providers also offer other benefits and features attached to the term life insurance. These features may include:

funeral advancement benefit – this will pay an advanced portion of the sum insured to cover the immediate costs of a funeral, and
grief support services – confidential grief counselling at an independent counselling organisation.

Term life insurance can be used to:

pay off the mortgage or other debts that may affect the person and their family’s financial future
pay for funeral costs
pay for child care or home help to aid the remaining spouse, and
provide a reserve that can be used as income should the remaining spouse decide not to work

Term life insurance is the most common type of insurance because it is simple and low cost compared to other insurances; if you die or become terminally ill, you will be paid a lump sum. This can clear your debts, and provide for your family (subject to individual circumstances and the sum insured).

Am I eligible to apply?

Term life insurance is generally available for people between the ages of 16 and 70, but some insurers allow cover to be taken out by people up to age 84.

How are my premiums cacluated and what can affect the premiums I pay?

You pay for life insurance through a regular premium. The cost of the premium is calculated based on your life expectancy as well as the insurance company’s risk assessment of you. In simple terms, the older the person, the higher the premium. If the person is a smoker or likes to participate in hazardous activities, the higher the risk and the higher the premium. The insurance company also considers your medical history. The premium is generally indexed according to the consumer price index (CPI), or a formula based on the CPI. Therefore the cost of premiums usually increases throughout the term of the policy even if you are paying a level premium as insurers will rerate thier book of clients or adjust thier premiums. due to claims history.

How do I get a quote?

At Two Mile Bay we have access to 12 different insurers.

To obtain a quote please call (03) 52 615 557 or email advice@twomilebay.com.au