Unveiling misconceptions that could affect your insurance

There are some common misconceptions that can stop people from getting the cover they need. 

Here, we expose some of the biggest life insurance myths. The following is not personal financial advice...but it does contain useful information which many people should think about! 

Many directly available life insurance covers don’t include many health questions when you apply and often these have a higher number of and/or broader pre-existing condition clauses that may result in a higher prospect of your claim being delayed or even declined. If you already have life insurance or are thinking about taking out cover, you need to do your homework. Always read the Product Disclosure Statement (PDS) and other documents from your insurer to make sure you know what you are, and are not, covered for. It can be easy to buy cover because it’s quick and/or cheap, but this doesn’t mean it’s the best life insurance for your particular circumstances.  

Fact: Even if you don’t have any dependants or a partner, there may still be debts to pay and funeral expenses to cover if you were to pass away. For example, the average basic cremation in Australia costs upwards of $4,000, with burials costing much more. If you don’t have many debts, nor a partner or children to think about, then your life insurance may cost you less than you think because you may decide that you do not need a high level of cover.

Fact: The life insurance provided within many superannuation funds may not adequately cover your needs. Research shows that super’s median default cover meets only about half of the basic needs for households with no children¹. The proportion is lower for families with children – falling to less than 25% for families with just one child.

Fact: The cost of life insurance might surprise you – it may be less expensive than you think. Policies vary, and premiums will depend on your age, health, and lifestyle. It can be money well spent. Life insurance could help to safeguard your family if you were to pass away.

Fully underwritten = greater certainty. One of the key points of confusion can centre around the difference between “underwritten” cover, which is assessed upfront, versus products that are not fully underwritten (“partially underwritten”), where the assessment is made at the time of claim when your family may be going through difficulty. With fully underwritten cover, the insurer asks a number of health, occupation, and lifestyle questions upfront and sometimes requires medical tests and details of your medical records. This process does take longer than cover that is not fully underwritten but results in far greater certainty about the risks the insurer is taking to provide cover, and importantly, greater certainty for you at claim time. 

Fact: A medical diagnosis does not automatically mean you will no longer be eligible to obtain life insurance. You need to disclose your health conditions during the application process, but this doesn’t necessarily mean that cover will not be provided. In some instances, cover will be provided with an exclusion relating to your specific condition. Premiums may be slightly higher to reflect your increased risk levels, but if you are taking positive steps to manage your condition, you can keep any additional premiums to a minimum. Bear in mind that there are some medical conditions where NobleOak won’t be able to offer death cover, but these are limited.