Why the Cheapest Life Insurance Isn't Always the Best Option

Nobody knows exactly what the future holds. Because of this, it always helps to be prepared for unforeseen circumstances. During calamities, for example, you'll likely need ample amounts of food and water. But when you die, that is where life insurance can protect your loved ones.

Dying, as with living, can be an expensive affair. Not only do the people you leave behind have to take care of the matters of your burial, they might also have to shoulder the financial obligations you were unable to settle. On top of that, you would also create a void in the household income, which your loved ones depend on for their education, health, and day-to-day survival.

But life insurance comes at a price. Let's say that you want to provide your family with more than adequate cover when you pass. Of course, you would also have to pay higher premiums. It's a difficult situation to be in. But if you're tempted to pick the cheapest life insurance available, we recommend that you read this article first. We'll share with you a number of reasons why the cheapest insurance isn't always the best option for you. Let's get started with...

  1. It can leave your family vulnerable. When you die, the last thing that your family would like to deal with is their finances. It's therefore important that you make sure that your loved ones are adequately covered when they need it the most. The general rule of thumb when it comes to life insurance is to get a cover that is 10 times the amount of your annual income, plus other possible expenses on your burial and other financial obligations. Let's say, you earn $70,000 per year. Based on the rule we mentioned, you need to provide your family a lump sum payment of at least $700,000, plus your other expenses.
  2. It might come with a catch. The big question you should ask yourself is how a particular insurer can provide such low rates. Chances are that they are cutting back on the cover to help put the price of the premium down. Because of that, you need to make sure what exactly you're covered for by reading the fine print. Otherwise, you'll end up with a cheap policy that doesn't really provide you with a lot of cover.

What's important then is that you should get the best policy that you can afford. After all, it is your family's future at stake, so there's no reason you should scrimp on it. Here at Rate Detective, our consultants are ready to help you find that best life insurance for your needs. They will even provide you with personalised rate comparisons of Australia's top insurers. Contact us today for more details!

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Published on May 5-th, 2013 in Insurance
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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