How does life insurance work??

Macquack · 30 July 2009

jono1887 said:
You pay a small fee per week and when you die.... they pay out 100k+
Where does this 100k come from? If you pay $10/week for 40yrs thats only 21k

Krusty the Klown said:
You will probably find that "life" cover only covers you until age 65 or 70. You may be able to get accidental death cover after that age, but not death from any other means.

Krusty nails it again.

In the case of Term Life Insurance, the question should not be "Where does this 100k come from? but rather "where did the $10/week for 40yrs go to? If you are Joe Average and live past 75, the answer is - "the money went down the drain", or more precisely, into the coffers of the evil insurance companies pedalling their "products" of fear.

gooner · 30 July 2009

Krusty the Klown said:
That's true

I believe they set the limit for Joe Average at about $1.5M to $2M, which would be the average wage earner's income to age 65.

I should have elaborated earlier - even if you have $2M in cover with one company, the salesmen will say - no, not enough, you need another $1M with MY insurer.

Sometimes $100K in cover is enough, say if you have no debt and own a business to pass on to your family. Sometimes no need for cover at all !!!

Agree on the $100k cover - for single people with no dependents, there is really no need for cover at all.

Watch out for getting a second policy. Firstly you will need to disclose the first policy, secondly you may need to then disclose the second policy to the first company. And they may not pay out on duplicate insurance, so you will still only get $2m in total. With insurance, it's all in the small print, particularly that catch all along the lines of "you must tell us anything that might affect your premium or life insurance"

gav · 31 July 2009

Krusty the Klown said:
There is such a thing as too much life insurance, don't listen to life insurance salesmen!!! (although everyone probably knows that already)

Not referring to you gav, seems a sensible amount of cover.

I totally agree, which is why I got the amount of cover I required and nothing more. Once my partner has a full time job and the mortgage is paid down a bit, I will be changing my cover. I wasn't going to listen to any scare tactics to get me to sign up for anything I didn't need.

Then there are others like my tradie brother (self employed) who is in debt up to eyeballs - mortgage, car, credit card, purchases interest free furniture & TV, etc... If he sustained an injury and required a month off work he and his partner would be screwed...

Julia · 31 July 2009

gav said:
Then there are others like my tradie brother (self employed) who is in debt up to eyeballs - mortgage, car, credit card, purchases interest free furniture & TV, etc... If he sustained an injury and required a month off work he and his partner would be screwed...

If he just required a month off work, wouldn't this be a claim on Loss of Earnings insurance rather than Life Insurance?

Krusty the Klown · 1 August 2009

Julia said:
If he just required a month off work, wouldn't this be a claim on Loss of Earnings insurance rather than Life Insurance?

Yes, this would be claim on income protection cover.

How does life insurance work??

Macquack

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Julia

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How does life insurance work??

Macquack

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