Avoiding some common life insurance mistakes

With inflation at a 20-year high, rising interest rates and continued uncertainty over global markets, cost of living pressures are being felt by Australian families and small businesses. 

With household budgets squeezed, the temptation to reduce insurance premiums can be extreme, but making savings on policies such as life insurance can be a false economy that can come with unnecessary risks, according to life insurer NobleOak, the Australian life insurance partner of the CA ANZ Member Benefits Program.

 “In disrupted, unpredictable times, it’s understandable to want to save money,” NobleOak head of underwriting Phil Hill says. “Life insurance is a daunting area where it’s easy to feel overwhelmed with so many options available, but it’s important to consider your options before you make cut backs that you may regret later.”

NobleOak has outlined the five of the most common mistakes that Australians sometimes make when taking out Life Insurance.

1. Skim reading the policy documents

No one likes ploughing through endless terms and conditions, but it’s important to pay attention to any exclusions that may affect claims.

2. Limiting cover to death

A life insurance policy can protect against more than just loss of life. For example, if an individual has a family, they can choose income protection over to help protect against income loss from serious injury or illness. They may also decide to consider Total & Permanent Disability cover to help guard against a situation where they become disabled and unable to work again.

3. Procrastination

Young people may think they’re not going to need life insurance for a few years, but putting it off can backfire.

“The younger you are, the healthier you’re likely to be and that can have significant implications for the cost of the premiums,” Hill says. “Companies are likely to offer more favourable premiums if they’re less likely to need to pay out any time soon. To get the best options for you, it might be better to consider taking out a policy at a younger age.”

4. Focusing only on price

Understandably, people are looking for something they can afford. Someone with an average monthly income and three kids may not be able to afford life insurance right away.

“Focusing on the real ‘value’ of a policy can be just as important as the price,” Hill reveals.  “You may qualify for better premium rates depending on your health, gender, age, and more so it’s worth asking your insurer.” 

5. Having no plan

Before investing in a policy, it’s crucial to know exactly what the potential pay out will have to fund. It could be to pay off a mortgage, cover the children’s school and university fees or provide enough for a partner’s retirement. “If you don’t consider what it’s intended for, you may find yourself underinsured,” he says.

6. Failing to make updates

A divorce, new baby or spouse’s death will affect the list of beneficiaries, so it’s essential to update your policy as significant life events happen. And when the children have completed their education, it may be that the payout amount can be reduced. It’s about thinking through life’s changes and considering whether the amount of cover you have is appropriate for different stages.

Get my quote

To get a quote for NobleOak Life Insurance click here. You can also call one of NobleOak’s friendly team members on 1300 041 494 and mention ‘IPA’.

Important information – Please note, cover available to Australian residents only.

The Target Market Determination for NobleOak’s Premium Life Direct insurance is available at www.nobleoak.com.au/target-market-determination

NobleOak Life Limited ABN 85 087 648 708 AFSL No. 247302 issues the products. This information is of a general nature only and does not take into consideration your objectives, financial situation or needs. Always consider the Product Disclosure Statement (PDS) (available at www.nobleoak.com.au) to see if the product is right for you.