What Is Life Insurance?

At its core, Life Insurance is pretty simple:

Paying somebody else to provide for you financially in the event of death, disability, serious illness or injury.

Of course, there are layers and layers of detail heaped upon this simple definition, but through it all, that’s what life insurance is - you’re paying an insurance company now, to give you a payout in the future when one of the ‘trigger events’ occurs.

Not all insurance companies are created equal.

Look for one that has: a strong history of paying out claims, a strong financial position, a good range of 'trigger events' and a well-priced offering.

What do we mean by ‘trigger events’? Well, in the contract that you sign with an insurance company, they layout all of the things they will pay out for. This could range from a heart attack to a traffic accident to a serious sports injury. This contract - made up of their Product Disclosure Statement and your individual policy - is where the detail is.

And as with anything, the devil is in the details.

Always, always, always read your insurance contract.

Did you know there are certain types of heart disease insurers will pay for, and others they won’t? The last thing you want is to claim on your policy and for it to be refused.

Be wary of discounted policies.

If an insurer is significantly cheaper than their competitors, it might mean that they’re relaxing their rules to take on more clients.

This could impact how willing they are to pay claims down the track. Life insurance is one of the few times it pays to stick with the herd.

Continue reading: Things you should know