There comes a time when we must think about what we will leave behind for our families when we pass away. Fortunately, your family’s security can be safeguarded for the future, with the help of a good life insurance policy.

Applying for life insurance is a huge step forward in looking out for your family’s future, but it can be a confusing process. Speaking to insurance brokers in Melbourne is the best way to receive independent and quality advice regarding your life insurance options. Your level of income, health and age are just some factors that will influence the level of cover you are able to receive.

It’s therefore important to understand the process and your vulnerabilities, to ensure that you receive the best level of cover available for your circumstances. So, let’s lift the fog and confusion, and show you the steps you can expect to take when applying for a life insurance policy.

Applying for Life Insurance

Traditionally there are two avenues you can pursue in order to apply for life insurance.

Licensed Adviser: The first is to apply through a financial planner or licensed expert. This option is best for those who have a complex financial portfolio, and who needs to require tailoring the insurance to specific circumstances and risk profiles. It is also a popular choice for those who do not want to pursue the time-consuming personal application process.

Direct: The other alternative is to buy your insurance directly through the insurer. Most insurers today have online or over the phone application forms. This avenue is best for applicants who are single, with no kids and want to finish the process quickly.

Underwriting

To purchase the life insurance that is most suitable for your specific needs, it’s important to understand how life insurance companies process your application. The system used by insurance agents is known as ‘underwriting’, which simply is a method to determine your relative risk.

Underwriting an application aims to ensure that the cost of cover is appropriate for the risks faced by the person being insured. For example, as smokers face higher risks of suffering from lung cancer or a heart attack, smokers will often pay a higher premium than non-smokers.

Other factors that might make it more difficult for you to be accepted for life insurance include:

  • Pre-existing conditions (such as cancer or heart disease)
  • Major heart attack
  • High-risk occupation (such as military service)
  • Dangerous habits

Most companies will ask you to complete certain steps to determine if you qualify for their life insurance policies. For some providers, this may include answering health-related questions, reviewing your personal and family medical history, or undergoing a medical exam to evaluate your overall health. Each company has different ways of assessing your risk and tailor their fees accordingly.

Choosing a life insurance cover

Life insurance requires an understanding of how much cover your family will require to live off in the event of your passing. In order to accurately determine this figure, it is important to monitor your expenses on a monthly/annual basis before pursuing a life insurance policy.

There are numerous forms of Life Insurance, which can be bundled together to provide greater coverage. The most popular insurance policies that fall under the life insurance banner include:

  • Total and Permanent Disability (TPD) insurance
  • Trauma Insurance (critical illness cover)
  • Income Protection

Comparing quotes

With so many providers out there, it can be difficult to choose which company will provide you with the best rates in the long term. The easiest and most efficient way to do this is to work with an independent insurance broker who works with most providers on the market.

Key takeaway

Once you’re covered, is crucial to reassess your cover every few years as your situation changes. Having more kids or earning a higher income, are just two common changes which need to be reflected in the level of cover you have. Speaking to a trusted professional is the first step to achieving the right level of cover that will protect your family into the future.