The following is not personal financial advice, but it does contain useful information which many people should think about.

Before examining the nine myths around life insurance, consider one key truth: fully underwritten life insurance can bring an added degree of financial security and peace of mind into your life.

Myth 1: Less medical questions means quicker and better cover

Several directly available life insurance covers don’t ask many health questions when you apply. Often these have a higher number of and/or broader pre-existing condition clauses that may result in the greater likelihood of your claim being delayed or even declined. If you already have life insurance or are thinking about taking out cover, do your homework: always read the Product Disclosure Statement (PDS) and other documents from your insurer to make sure you know what you are, and are not, covered for. It can be easy to buy cover because it’s quick and/or cheap, but this doesn’t mean it’s the best life insurance for your particular circumstances.

Myth 2: I’m single, so I don’t need life insurance

Fact: Even if you don’t have any dependants or a partner, there may still be debts to pay and funeral expenses to cover if you were to pass away. For example, the average basic cremation in Australia costs upwards of $4000, with burials costing much more. If you don’t have many debts, nor a partner or children to think about, then your life insurance may cost you less than you think because you may decide that you do not need a high level of cover.

Myth 3: My superannuation fund’s life insurance is enough

Fact: The life insurance provided within many superannuation funds may not adequately cover your life insurance needs. Research shows that super’s median default cover meets only about half of the basic needs for households with no children. The proportion is lower for families with children – falling to less than 25% for families with just one child.

Myth 4: Life insurance is expensive

Fact: The cost of life insurance might surprise you – it may be less expensive than you think. Policies vary, and premiums will depend on your age, health and lifestyle. A non-smoker in their 30s can expect to pay less than $1 a day for comprehensive cover. It can be money well spent – life insurance could help to safeguard your family if you were to pass away.

Myth 5: Fully underwritten and Partially Underwritten covers are the same

Fully underwritten = greater certainty. One of the key points of confusion can centre around the difference between “underwritten” cover, which is assessed upfront, versus products that are not fully underwritten (“partially underwritten”), where the assessment is made at the time of claim when your family may be going through a difficult time. With fully underwritten cover, the insurer asks a number of health, occupation and lifestyle questions upfront and sometimes requires medical tests and details of your medical records. This process does take longer than cover that is not fully underwritten but results in far greater certainty about the risks the insurer is taking to provide cover, and importantly greater certainty for you at claim time.

Myth 6: Only breadwinners need life insurance

Fact: While it is important for the family’s main breadwinner to seriously consider taking out life insurance, many families make the mistake of not thinking about taking out cover for their primary caregiver. Stay at home mums and dads provide an important role that, while unpaid, may need to be replaced ‘in kind’. The cost of childcare, cleaning, housekeeping and home maintenance duties can be considerable. Bear in mind too, that the family’s main earner may have to reduce their hours of work in order to help care for the children.

Myth 7: I won’t need life insurance until I am older

Fact: Many people make the mistake of delaying taking out cover until they are older. But life insurance premiums are calculated based on a number of factors including your age and health, which is assessed before your cover commences, so it makes good sense to apply while you are young and healthy. Did you know that many claims are made by people aged in their 40s?

Myth 8: My health disqualifies me from life insurance

Fact: A medical diagnosis does not automatically mean you will no longer be eligible to obtain life insurance.  You need to disclose your health conditions during the application process, but this doesn’t necessarily mean that cover will not be provided. In some instances, cover will be provided with an exclusion relating to your specific condition. Premiums may be slightly higher to reflect your increased risk levels, but if you are taking positive steps to manage your condition, you can keep any additional premiums to a minimum. Bear in mind that there are some medical conditions where NobleOak won’t be able to offer Death Cover, but these are limited.

Myth 9: I can file away my life insurance policy and forget about it

Fact: It is important that you keep your life insurance policy up to date and consider whether you should adjust your cover levels with significant life events. Also, with NobleOak’s life insurance, with certain major life events – marriage, birth of a new baby, increasing your mortgage or adopting a child – you can apply to increase your Death Cover without any further medical underwriting (subject to limitations). This facility can help act as a buffer against being underinsured as your life circumstances change.

For an example of an award-winning life insurance company with a long-standing reputation, look no further than NobleOak.

A life insurer with over 140 years of history, NobleOak provides you with an easy way to get a Life Insurance quote. Ask around and you’ll see why so many Australians have put their trust in NobleOak over the years.

This is general information only and does not take into consideration your individual circumstances, objectives, financial situation, or needs.

To find out more about NobleOak’s FlexiCover Life Insurance, click here or call the NobleOak team on 1300 108 490 and mention ‘Community First’. Community First members receive the first month of cover free!^

 

Last updated: 11 May 2021

The information contained in this article is only correct at the point of time of publication. It is general information and has been prepared without taking into account your personal circumstances, objectives or needs. Please consider if this information is right for you before making a decision to acquire any product.

 
 
Important Information – FlexiCover is issued by NobleOak Life Limited ABN 85 087 648 708 AFSL No. 247302 (‘NobleOak’). Community First Credit Union Limited ABN 80 087 649 938 AFSL/Australian credit licence 231204 (‘Community First’) promotes the FlexiCover product under a marketing arrangement with NobleOak but does not provide any financial advice regarding - and is not responsible for - the product. NobleOak Services Limited (wholly-owned by NobleOak) pays Community First an ongoing commission of 15% of premium when products are acquired as a result of the marketing arrangement. This commission is at no additional cost to customers. Further information can be found in the NobleOak Financial Services Guide (FSG) available at www.nobleoak.com.au
 
^ First month free offer - if you apply for cover and cover is issued you will not start paying premiums until one month after the commencement date of the cover. This offer is available once only per new customer and may not be used in conjunction with any other offer.
 
This information is of a general nature only and does not take into consideration your individual circumstances, objectives, financial situation or needs. Before you purchase an insurance product, you should carefully consider the Product Disclosure Statement (PDS) to decide if it is right for you. The PDS is available by calling NobleOak on 1300 108 490 or from www.flexicoverlife.com.au/communityfirst. NobleOak cannot provide you with personal advice, but their staff may provide general information about NobleOak life insurance products including FlexiCover.