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Why Your Home and Car Aren’t the Most Important Things to Insure

Money Bulldog started life as a website focussed on personal finance and practical advice for the UK market, but we’ve come to realise that a lot of the things we talk about here hold true overseas as well. With that in mind, here’s our resident Australian contributor Raj Padarath on the topic of life insurance quotes in the second of today’s posts for our readers in Australia.

Life insurance can be a daunting topic to think about, let alone investigate. Often when faced with a confronting topic such as insuring your own life, the temptation is to simply ignore, delay or make a joke and move on.

But there is undoubted merit in looking at life insurance. It gives you peace of mind. You wouldn’t drive your car without insurance, so does it really make sense to not cover your life? And that’s without even taking into account the benefit that comes from the peace of mind that flows through to your family. This is one of those things that can be done that is a truly altruistic act. What could be more selfless and important than taking a relatively simple step to ensure that in the event you couldn’t do it yourself, that your family could continue to get educated, travel to work and grow as you intended for them.

The next step is to become familiar with the topic to make sure you understand what you’re getting and to get the information you need to ask the right questions, and ultimately, make the right choices. Again, think back to how much time and research went into choosing your last car and relate it to how much effort should go into this far more important decision.

Luckily, there are companies out there that offer services that reduce the head-spinning array of options and quotes down to a manageable number with personal advice. There are several standouts, and GIO offers life insurance quotes that are competitive with the major players while still being large enough to give the trust and security you need.

The deregulation of the sector in the late 80’s led to a huge proliferation of financial instruments and service providers that offer insurance options, as well a range of associated services. However, many of these latest entrants to the market have larger marketing budgets than strong products, and it certainly pays to do research using a reputable, well-established provider. These are also the best places to get your first quote, as they will provide a realistic number, rather than an “only for our first 100 callers” special or an offer laden with asterisks that qualify the otherwise incredible (and too good to be true) price. Once again, GIO and other building societies and companies with a long trusted history are a good place to begin your research.

Often the structure of life insurance policy options is highly variable and can be tailored to your needs and circumstances. For example, if you have a regular wage, a weekly contribution to your premium that is deducted from your pay is usually the simplest arrangement. On the other hand, if much of your work is variable and unpredictable, and therefore changes week to week, a fixed contribution over a longer timeframe, such as fortnightly or monthly, could be the preferred option to smooth out any short term variances in cash flow.

Remember to take your time and compare your options and quotes, and as with any important decision, to weigh the quality of the offering against potential cost savings when making any final choices.

Life insurance is not an easy topic to approach. But once it’s done, the benefits far outweigh any negatives, and you and your family can get on with your lives, safe in the knowledge that you have done everything in your power to ensure the best future for them.

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16 Responses to Why Your Home and Car Aren’t the Most Important Things to Insure

  1. moneystepper says:

    I think its really important to get the right balance with life insurance. Millions of people don’t have enough life insurance cover. However, I believe that there is a huge number of people who actually have too much and are paying too high premiums now for something that might never happen. Its all about striking that balance.
    moneystepper recently posted..How accidents can change your perspective on life and moneyMy Profile

    • Raj says:

      That’s a really great point, while underinsuring is an issue, there is a chance a lot of people “double-up” without realising it as well. This is especially the case where employers offer cover to their employees and there is a level of protection in that model. Knowing what all those forms you sign when you start a job actually mean is really important in this regard.

  2. Pauline says:

    I don’t have dependents so don’t think much about life insurance but that is a topic I know is important to tackle especially when people rely on your income.
    Pauline recently posted..A job may cost you more than you thinkMy Profile

  3. I agree with moneystepper, the right life insurance balance is important. It is possible to wind up with the wrong kind of life insurance, or too much life insurance if you are not careful. That being said, especially for those who have dependents it can be a very important type of insurance to have!
    Dee @ Color Me Frugal recently posted..Color Me Frugal is joining the Yakezie Challenge!My Profile

    • Raj says:

      That’s true, although 2012 research (Australian figures) show that only 22% of Australians have any life insurance at all, so it seems that underinsurance is a far bigger problem than overinsurance. Interested to know if the problem as bad in other countries?

  4. It’s so true that cars and houses aren’t the most important things to insure. It’s scary to see people go on with their lives without life insurance. This is especially true when these people have families to take care of.
    Tushar @ Everything Finance recently posted..How To Save A Few Bucks When You Go Out To EatMy Profile

  5. Alana says:

    What do you think is the right age to consider life insurance? I’m single in my early 30 and have been considering this for a while now.

    • Raj says:

      Hi Alana,

      I guess the general consensus out there is that as soon as you are independent of your family that is a good time to look at it. It may seem over cautious, but the compensation is that the premiums are often much much lower and many companies offer 5 and 10 year discounts once you have been with them for several years, which makes it a long term investment.

  6. I think whenever you have any dependents, be it a partner, children or even close family that rely on you, or your income – then that is good time to consider life insurance. It’s not only peace of mind for you, but for them too.

  7. Andrew says:

    I think this warrants further investigation. There are constantly new private health insurance organisations popping up all over the place. Nevertheless, this was an interesting and observant article.

    • Raj says:

      Thanks very much for your feedback Andrew, great to hear you found it interesting. If it has made anyone do further research or investigation of their own that would be really pleasing, as that was the main purpose that we decided to write it!

  8. Hayley says:

    Make sure you always compare quotes. Even a few dollars a month can really add up over several years.

    • Raj says:

      Absolutely, there are some great comparison websites and tools out there, but beware of the pitfalls of these too, as some deliberately exclude certain companies that don’t pay them commissions / fees for being included

  9. We struck a balance on the amount of coverage we needed compared to what we are paying, but that was approximately 4 years ago. Since then the mortgage is albeit paid off and things have changed in our lives. I think it’s important to change your coverage as your life changes. I’m sure our coverage will be reduced to reflect the fact that we will have no liabilities left.
    Canadianbudgetbinder recently posted..How to keep the romance alive on a budgetMy Profile

    • Raj says:

      That’s really great personal insight, I think the biggest hurdle for many is getting the quote and cover in the first place, and once it is in place then re-evaluating and adjusting just becomes part of your regular financial decisions, as your experience seems to suggest

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