Life insurance companies have a legal obligation to clearly inform you about all the terms & restrictions in the life insurance policy prior to the person entering into the contract. This includes the insurer providing you with a copy of the policy document and product disclosure statement, both of which are to be written in wording that is clear and unambiguous. Once you have entered into an insurance agreement, the life insurance company is also obliged to inform you in writing prior to the policy expiring, irrespective of whether the insurer wants to enter into a new policy or not. If you decide to apply for life insurance, you are required to provide the life insurance company with all the information about you that may affect the risk you are asking the insurer to accept. This is referred to as your 'duty of disclosure' You need to ensure you understand the question being asked and provide accurate answers which truly reflects your situation. This information is critical for the insurer to understand the risk you are asking them to ensure. If you dont understand what is being asked, please refer to your insurance broker or the life insurance company directly. If you do not answer the question fully and accurately, the insurer may be entitled to refuse any claim you make.
Be prepared to undertake a medical examination prior to the life insurance company accepting your application to be insured. The results of your exam and your completed questionnaire will be used during the underwriting process and in calculating your final premium.
Changes in terms of the policy
Life insurers can change the terms of the policies from time to time. They are obliged to inform you in writing and give you an opportunity to review the changes and possibly seek cover elsewhere.
Life insurance company ratings
Not all life insurance companies are equal. It is essential that you deal with a highly rated company to ensure that your claim will be paid should you or your relatives need to make a claim. Talk to your life insurance broker for more information on the rating of different risk providers.
How much life insurance cover do I need?
The purpose of life insurance is to provide your dependents with a sum of money sufficient to pay out your debts and/or to provide an income sufficient to support your family for a period of time - usually until your children are 18 years old. As everyone's situation is different, the level of life insurance cover required will vary. Most financial advisors will recommend that you have life insurance cover equivalent to a minimum of 10 times your average annual income.
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