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The Problem with Online Life Insurance Quotes

7 Aug 2013 5:05 PM - Joshua Stega, Financial Adviser Sydney

5 Questions to Consider Before Proceeding with That Online Insurance Policy

As with most things in life, the cheapest option is rarely the best. So when it comes to life insurance why do people scour the internet searching for the cheapest deal when they are trying to protect their most valuable asset?

When it comes to personal insurances, no two policies are the same, therefore a comparison on cost alone is fraught with danger. Here are five questions to ask yourself before applying for that online policy.


1.       What do you need the cover for?

In most cases people will want to cover their debts and provide for their family in the event of their passing. That seems pretty simple, just work out your current level of debt and then add a bit extra to provide for your family. How much would be enough for your family if you were no longer here?

Suppose an unexpected event occurred that resulted in you being injured such that you could never work again? Do you have any cover for this?

Personal insurances include life insurance, total and permanent disability (TPD) insurance, trauma insurance and income protection insurance. The correct mix of these types of cover are needed to ensure that you are getting what you need, not just what you pay for.


2.       How are you going to structure the policy?

How are you going to hold your insurance policies? Through superannuation, through your personal name or is someone else going to hold a policy on your behalf. In certain cases policies held in super may get paid out, but you won’t be able to access the proceeds because you have not met a condition of release.

There are a few tricks of the trade, such as split policies, that allow you to structure the policy for any event.


3.       Are you self employed, or have a unique situation?

If you situation is slightly different to the normal 9am to 5pm office worker, it is likely you will need to use an insurer that specialises in people like you. This is where advice from an expert can be invaluable and could save you a lot of money in the long run.


4.       Do you have health issues?

If you have health issues, this is where an financial adviser that specialises in insurance will really earn their keep.  In most cases you will be able to get cover for most health issues, however this will involve significant negotiation between your adviser and the underwriters to ensure you can get the insurance cover you need.


5.       Are you structuring your policy tax effectively?

As Benjamin Franklin said, the only certainties in life are death and taxes. Both of this apply when you are seeking life insurance coverage. Some policies are tax deductible and then taxable on payout, while others are non taxable and will be received tax free when paid out. You really need to structure your insurance policies with the after tax result in mind.

In most cases insurance advisers will be able to provide professional recommendations tailored to your individual situation with little or no cost. When it comes to insuring your most important assets why would you take the risk online?



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The Wealth Guy | Joshua Stega Financial Adviser Sydney

Joshua Stega, is head of financial advice at JAS Wealth (privately owned financial planning firm in Sydney). He helps successful individuals manage their wealth. He has a Masters in Taxation & Financial Planning, is a Fellow of the Taxation Institute, a SMSF Specialist Advisor and has significant direct investment experience.    Google+     Twitter     LinkedIn     Facebook     Instagram

M.TaxFP, LLB(Hons), B.Bus(Acc), FTI, Adv.DipFP, DipFP, SMSF Specialist