Top life insurance companies in USA

One of the primary reasons that people take out any kind of insurance is for peace of mind. And life insurance is no different. 

While it is designed to help the family of someone after they have passed away, it is often most useful when the loved one is alive. For many, the thought of their family and loved ones struggling to make ends meet is too much to bear, and life insurance can help put these fears to rest.

So what is it exactly? A life insurance policy provides a lump-sum payout to you if you become terminally ill, or to your family when you pass away. Some of the major life insurance providers in Australia include MLC, AHM, Allianz and AAMI.

It’s peace of mind knowing that the bills will be covered and the people you care about will not be financially disadvantaged, giving them one less thing to worry about during a stressful and distressing time.

Most of us don’t like to think about death or terminal illness, but it’s important to ensure you’re adequately covered when you take out life insurance so that you have the right policy in place for you and your family.

How Does Life Insurance Work?

Before considering taking out life insurance, the first step is to understand how it works. Life insurance covers death by any cause, although suicide is usually excluded for a set period of time of the policy. A pay out to family will normally occur if the death is related to an event such as:

• accidents
• natural causes
• medical complications
• acts of violence.  

Types of Life Insurance

There are a number of different types of life insurances to suit your personal circumstances. The main ones include:

• Life cover. An insurance that pays a lump sum to your nominated party when you die. The cash payout to your family can be as much as $1 million, depending on your age.  General entry age requirements are 18 to 79 years.
• Trauma cover.  Pays out if you are diagnosed with a specific illness e.g. a stroke, so that you can focus on your recovery. This is sometimes referred to as ‘critical illness’ or ‘recovery insurance’ and pays a lump sum amount if you suffer a critical illness or serious injury. This includes cancer, a heart condition, major head injury or stroke. Trauma insurance does not cover mental health conditions. General entry age requirements 18 to 64 years.
• Total and permanent disability (TPD) insurance. Provides payment to clear debts, and cover medical costs if you become permanently disabled. The lump sum also helps with rehabilitation and living costs.General entry age requirements 18 to 64 years.
• Income protection insurance: Generally, the pay out on this insurance will be monthly, usually 85% of your bills.  This type of insurance is taken out to cover expenses should you need to take time off work due to illness or accident.
• Funeral cover: As the name suggests, funeral insurance is designed to help your loved ones pay for the cost of your funeral in the event of your death.

How to Decide if you Need Life Insurance

There are a number of reasons people seek out life insurance coverage.

Do you have family members or dependents that you look after financially? Regardless of who your dependents are: children, a spouse or even your parents who you support,  life insurance is assurance that they will be provided for financially, if something were to happen to you.

Are you a sole trader or the main breadwinner? You may wish to protect your business to ensure it survives.  You can choose a business-owned life insurance policy with a disability insurance that names the business as the beneficiary so it can continue if something happens to you.   

Or, if you work in a high-risk area, you may want to consider a disability insurance that continues to pay you a wage, should you find yourself unable to work due to injury.

Is Life Insurance Covered by my Super Fund?

Did you know that you may already be covered through your superannuation fund?

Before you go any further, it’s worth checking if your super fund already includes an option for life insurance. To find out what insurance you have in your super fund, and who the insurer is, you can call your super fund or access your super account online. Check your super fund’s annual statement and the product disclosure statement (PDS).

It is also important that you ask:

• What does the insurance within super cover you for? Most superannuation policies offer a few life insurance products. These include life cover (which pays a lump sum if you die) and total and permanent disability (TPD) insurance, which pays a lump sum if you become totally and permanently disabled because of illness or injury.  
• How much are you covered for within super? This will really depend upon how much you’re paying in premiums for the cover. Generally, you can find this information by reading through your PDS statements.  If you cannot find the information then call your superannuation provider. The government’s Moneysmart site has some useful information to guide you through.
• Have you kept updating your nominated beneficiary?  To ensure your benefactors receive payout it is critical that you nominate the names of your benefactors in your policy. You will be required to fill in a binding nomination form from your super provider, setting out how you wish some or all of your superannuation death benefits to be distributed – this could be to your children or spouse. The nomination is generally valid for a maximum of three years and lapses if it is not renewed. So it is important to check in with your superfund, otherwise you could risk others making a claim to the pay-out if you don’t keep it updated. If you do not have a binding nomination in place your trustee will revert to a preferred nomination, which isn’t binding. It will be used as a guide only by the Trustee of Australian Retirement Trust when deciding who to pay upon your death.

How to Choose the Right Life Insurance

In addition to looking at reviews and receiving word-of-mouth recommendations, it’s worth considering the following when taking out life insurance:

How Much are the Monthly Premiums?

While most insist that life insurance is not as expensive as most people assume, at the end of the day you’re the one who has to be happy with the price. Make sure you’re aware of what the monthly premiums will be and whether or not they will rise in the future. It’s natural that they will rise as you age, but make sure you’re financially comfortable with these hikes. People either opt for ‘stepped premiums’ that are recalculated on an annual basis (usually at a higher level) or ‘level premiums’, which are higher to begin with, but then price increases happen more slowly as they are not indexed to age.

What are the Waiting Periods?

Like most forms of insurance, waiting periods apply in certain life insurance products, especially income protection. Check your policy to determine the waiting period for different types of life insurances and shop around for a policy with a low wait time, as they can range from a handful of weeks to many months.

What are the Exclusions?

All policies feature exclusions of some kind and typically life insurance doesn’t cover suicide or any risky activities or behaviours. Read the fine print carefully, as it may surprise you what falls within these exclusion definitions.

How does the Claims Process Work?

Life insurance claims can be lengthy and stressful. This is where independent online reviews can be very helpful, so make sure you look for companies that place a premium on good customer service and speedy claims processing.

Any Additional Features?

Do you get a discount if you have multiple insurances with the company? Does it offer cover of more than two million dollars? (Most top out at this range). Is the policy underwritten by an insurer you can trust? All of these additional features can be taken into account when deciding on the best life insurance policy for you.

How to Buy Life Insurance

Before you purchase a life insurance plan it is important to shop around to make sure you get the cover that suits your circumstance.   

A broker could be a good place to start. Their job is to represent consumers in their search for the best coverage from several different insurance companies in exchange for a commission.

Or perhaps you can go direct? If you have the time and the patience, you can shop around yourself and go directly to a life insurance provider. Now that you have a better understanding of the questions to ask and the tools at your disposal, you are well-placed to find a policy that suits your needs.

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