Mistakes To Avoid When Buying Life Insurance

Life insurance is one of the oldest types of insurance, its theory is fairly simple, individuals pay premiums, and pay outs are made as death benefits.

The most common mistake life insurance shoppers make is purchasing the wrong amount of insurance. Being underinsured can leave your family in financial danger following your demise, while buying too much insurance could mean wasting money that could be put to better use elsewhere. Striking the right balance can be difficult, but is important to get this basic decision right.

Listed below are four mistakes to avoid:

1. Buying cover that individuals do not need.

Individuals who do not have dependants family members, spouses, partners or children will find that in the event of their death, it is unlikely that anyone else is going to be affected negatively so there is no need to purchase insurance to cover outstanding debts.

2. Buying cover from your mortgage lender.

Buying life insurance from your mortgage broker may not be the best way to go. Failure to shop around for life insurance is likely to mean that you don't get a competitive deal. It is important to compare quotes from a variety of different insurers before committing to a life insurance policy. This will help ensure that you get the right cover at the right price for you. Remember to carefully check the terms and conditions of different deals as well as their prices, and make sure that you are comparing like with like.

3. Buying more insurance cover that is required results in extra premiums.

Many individuals often fail to consider the death benefit provided to dependants which is offered by employers which is often three or four times the annual salary before deductions.

4. Choosing the wrong type of policy.

Life insurance comes in several different forms, and it is important to choose the type that is right for you. If you want your policy to pay out a fixed level sum to your family when you die, it is likely you will need to consider a form of cover called level term assurance. If on the other hand your main priority is for your life insurance payout to cover the balance of your repayment mortgage, a decreasing term insurance policy or a mortgage term insurance policy as it is sometimes known may be what you need.

Save time and money when buying your Life Insurance. Rate Detective compares up to 12 australian life insurance companies to find you cover. Just fill out the form on this page...

Get your quotes now

What to find out more? Enquire now

Published on February 2-nd, 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.

More on this topic

Enquire about Life Insurance

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.