Why Is Talking About life insurance So Damned Awkward?

I talk about life and death every day at work, and I get it – it's a little morbid.

The thing is the best time to get life insurance is today, not when you are sick but as soon as you can. The younger and healthier you are the cheaper it will be.

Not having it is a little bit like driving an uninsured car.

Here are nine things I wish everyone knew about life insurance...

1. It's not just for people over 50.

The best time to take out life insurance is before you ever need it and before your health deteriorates. Most people tend to get life insurance when they get their first mortgage, get married or have a baby.

2. Some of your insurance premium can be tax deductible.

Yup. Who doesn't love a tax deduction. Your income protection insurance premiums, according to the Australian Taxation Office, are tax deductible – the amount varies depending on which type you get.

3. Your premium is based on your sign-up health.

Your insurance contract is based on your circumstances when the policy starts, so if your health changes AFTER that, your policy is not affected. Another great reason to sign up when you are young and healthy!

4. You can get lower rates if you change job.

If you change occupation to a lower risk job you may be able to apply for lower rates for Total and Permanent Disability (TPD) and Income Protection cover.

5. Hallelujah – living insurance.

Living insurance or trauma insurance is the highest quality lump sum cover available. It will usually pay out the full sum insured on diagnosis of severe medical events like malignant cancers, strokes, heart attack and Parkinson's disease (there are over 30 events listed in the insurer's PDS). It is the most expensive cover because you don't need to be off work or terminally ill to receive the benefit.

6. Smokers pay twice as much.

But – you may be classed as a non-smoker 12 months after quitting.

7. What you pay for is what you get.

Higher quality cover costs more. So I recommend getting the best cover you can afford, to protect yourself and your family against the unexpected.

8. There is a policy that suits everyone.

No matter where you are at in your life there is a life cover for you. So whether you are single and protecting yourself against income loss through injury or illness, or having your first baby and allowing for the protection of your new family unit, or sorting out your affairs while you downsize your life, there is something for you.

9. Don't over think it.

I promise, we are here to help. At Compare Club we like to have a good chat and laugh with the people we speak to – especially when we talk about your options for life insurance.

Bonus points!

Do you know how many types of life insurance there are? If you guessed four, you were right on the money.

Term life insurance: Also known as 'life cover' or 'death cover', it's probably what most people think of in relation to life insurance. This type of cover pays a nominated beneficiary, such as your partner, a lump sum if you pass away or are diagnosed with a terminal illness.
Trauma cover: Also known as 'critical illness cover', this type of cover provides a lump sum of money in the event of a particular illness or injury, such as cancer or a heart attack.
Total and permanent disability (TPD) cover: TPD cover pays a lump sum if you can't work again due to permanent illness, injury or disability. You can choose to be covered for the job you were working in or to be covered for any profession, although these vary in both the cost of cover and the threshold for payout.
Income protection insurance: This type of cover pays up to 70% of your usual income, usually monthly, if you can't work temporarily as a result of illness or injury. Income protection insurance doesn't cover redundancy though, and can't be bundled with other products.

What are the cons of getting life insurance?

There are only a few cons that I can think of for life insurance:

It's not an investment, so you can't withdraw your money.
You can't see it, so the monthly payments can feel tiresome.
If you have pre-existing conditions it can require some legwork to find the right insurance package, it could also cost more and you may not be able to get it at all.
Getting a super life insurance plan can also be tricky as it reduces your balance and chance to compound your interest like a champ, and, they can have long wait times to access.
I'll say it again, you get what you pay for.

The bottom line

Yes, it's a hard thing to talk about your death and getting permanently injured or very sick –but it is also important. There is really nothing like the peace of mind that you'll have when it's sorted.

Just be sure to tell your family what it is and where you keep your paperwork!