How To Choose A Company To Buy Life Insurance From?

When you finally decide that you are ready to buy life insurance and once you have familiarised yourself with the different types of life insurance then it is time to choose a company and agent.

Some people prefer to purchase policies straight from the insurance company, while others prefer to buy life insurance through an agent or life insurance broker. All agents and brokers have to be licensed to sell life insurance in Australia.

It is important to purchase from a company that has a proven track record and is known for paying claims and has a good rating.

Credit ratings for a life insurance company

All life insurance companies in Australia are rated by their financial strength and the well known insurance companies will be more than willing to tell you their rating. The strongest life insurance companies are the ones with an A rating or better.

These ratings are issued by an independent credit ratings companies such a Standard & Poor's or A.M. Best. Rate Detective compares only financially stable and reputable life insurance companies with A.M. Best rating of A, A-, A+ or A++.

What can you expect the life insurance broker to do for you?

When life insurance broker or agent first makes contact with you, they should provide you with a statement of advice, and some may provide you with copies of the product disclosure statements for the insurance policies that they have recommended to you. The broker will then establish your life insurance needs.

Life Insurance Broker will ask you questions about your income and your net worth. With the information that you have provided about your financial situation, the advisor will then discuss what insurance options are available to suit your needs.

The life insurance broker should then explain various policies and other insurance related matters to you. You should be satisfied that the broker has found the right type and amount of insurance at a price which is affordable to you.

Will life insurance broker ask questions about my health?

Be prepared at the initial conversation to answer questions about your health. For example, you can expect questions about your age, family medical history, and whether you are a smoker or non-smoker.

When you apply for life insurance, you may be required to undergo a medical examination. Most life insurance companies will be able to organise this for you at no charge to you.

Always remember to answer questions about your family medical history and health carefully and truthfully, as this information helps a company establish a premium for your coverage based on the information that you have supplied. For instance you may pay a lower premium if you don't smoke. If however you should have a chronic illness, you may be charged a higher premium.

Should you happen to make a claim, accurate and truthful answers will expedite your payment, whereas inaccurate or untruthful answers may cause delays or even refusal of a claim.

Carefully study life insurance policy recommendations

The advisor will recommend a life insurance policy that will best suit your needs. Carefully look at the recommended policy and be sure that it fits your requirements. Most times an advisor will provide a "policy illustration" that explains how the policy works.

Carefully study your broker's recommendation. Make sure the broker explains any items that you don't understand, as your policy is a legal document, it is important that you are fully aware of what it provides.

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Published on April 4-th, 2010 in Life 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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Important Information

Not all providers in the market are included in the comparison.

Any information or advice contained on this website is general in nature and has been prepared without taking into account your objectives, financial situation or needs.