If you’re unfamiliar with buying life insurance, working out how much it costs might seem a bit confusing. The truth is, it’s difficult to say immediately how much life insurance could cost because it all comes down to your own circumstances. Things like your age and gender can play a part in the price of your monthly premiums. Let’s break down what exactly decides the cost of your life insurance...
The type of policy you take out will have an impact on the cost of your life insurance. At Cover Direct we offer two types of coverage: a level premium policy, or an age-based policy.
Level premium policy
If you take out a level premium policy, you’ll have protection in place for a set period of time, or term. This is usually between 10 and 30 years depending on your age. If you pass away during this term, your loved ones will receive a cash amount to help them when you’re gone. Your premiums will remain the same (level) for the duration of the policy.
Age-based policy (Whole of Life)
An age-based policy offers protection that is put in place for life. So, as long as you keep up with monthly payments, your family can get a cash amount when you die. With Cover Direct’s age-based policy, an Automatic Benefit Amount Increase option is built-in, meaning your benefit amount will increase automatically by 3% each year. Your premiums will also increase annually along with this, as described in your policy terms and conditions
While we can’t predict the future, we can prepare for most scenarios so that if something unexpected happens, there’s a plan in place to help keep life on track. Cover Direct offers two types of optional coverage that could give you some added peace of mind.
This additional coverage allows you to take out a benefit amount of $30,000 that offers protection for your child up to the age of 211. It pays out a lump sum amount if your child should suffer from accidental death or one of the serious illnesses or injuries defined in your policy terms and conditions.
Critical illness Insurance
This additional coverage provides a lump sum amount if you should suffer from a defined serious illness. This lump sum will be deducted from your overall life insurance benefit. The payment could help your family with a loss of income, medical bills and other financial strains.
If you add one of these optional coverages to your Cover Direct policy, it will have an impact on the cost of your monthly premiums.
What else affects my monthly premiums?
You may be surprised to find that when taking out a life insurance policy, your gender could affect the cost of your premiums. This is because your sex could determine whether or not you’re at a higher risk of illness or death.
Usually, the younger you are when taking out life insurance, the cheaper your monthly premiums could be. That’s why if you’re thinking of taking out a policy, it could be a better idea to get it sooner rather than later.
Some occupations are riskier than others. If you’re employed in what is considered a dangerous job, you could pay more for your life insurance premiums.
Your benefit amount
Your monthly premiums are calculated based on how much coverage you want. Generally, the higher the benefit amount, the more you might pay for it.
Your smoker status
Smokers often pay more for life insurance due to the health risks associated with smoking. So, if you’re a smoker you may want to consider quitting to help lower your premiums.
Your family history
Your family’s health history is important to insurers as it helps to provide an insight into how your future health may look. If you have any diseases or illness that are hereditary, it could affect the cost of your premiums.
Will my life insurance cost more if I have poor health?
Depending on your insurance provider, you could end up paying more for your life insurance if you are in poor health. This is likely because you’re more at risk of serious illness or death than someone in good health.
The good news is this isn’t the case for all insurance providers. With Cover Direct, you can get approved for coverage with no need to provide a medical or any health tests. Instead, you’ll be asked a few simple health and lifestyle questions. Your answers to these questions could have an impact on the cost of your life insurance.
What if I can no longer afford coverage?
If you take out a policy with Cover Direct and down the line you can no longer afford to pay your premiums, there’s no need to panic. You can apply to make changes to your policy at any time, completely free of charge, so your life insurance can keep up with family life.
How much coverage should I take out?
Deciding how much coverage is right for your family can seem overwhelming at times. After all, you want to make sure you’re providing the maximum protection for your loved ones. You can use our life insurance calculator for guidance. If you want to learn a bit more about calculating how much coverage you need, we’ve put together this guide to help you further.
Can I reduce the cost of my life insurance?
When it comes to your life insurance, you want to get the right coverage for a price that doesn’t break the bank. With Cover Direct, it’s possible to get protection in place from as little as $9.66 per month2.
If you’re trying to lower the cost of your premiums and you’re a smoker, you could consider quitting in advance of taking out a policy – this means going 12 months without consuming any tobacco products such as cigarettes, cigars, cigarillos and chewing tobacco, nicotine patches and gum. This may reduce your premiums.
Unfortunately, some things can’t be changed, like your age and sex. However, it could be possible to lower your premiums by taking it out sooner rather than waiting. Generally, the younger you are taking out a policy, the cheaper it could be.