Life Insurance basics
Life Insurance FAQs
- Who owns my policy?
You can choose the "policy owner" (this is the person that the insured amount is paid to if a claim is made). The policy owner could be you, or if you're setting up cover with a partner you can choose to have a "joint" policy, which means that you both own the insurance.
- Can I change the owner of my policy at a later date?
Yes, you can do this at any time - just contact us and we'll send you a "Transfer of Ownership" form.
- How much will life insurance cost me?
Premiums are based on your age, gender, smoking status, and the amount of insurance you are setting up. The costs shown on LifeDirect are the insurers' "standard premiums". For some people these can increase - for example if there is a history of illness to consider or they take part in "dangerous" hobbies.
- Will my premiums increase?
If you have selected a Stepped policy then on your policy's yearly anniversary your premiums will increase with age. If your insured amount has increased too (for example with inflation "indexation"), then this will also increase the cost slightly.
If you have selected a Level policy then your premiums will not increase each year with age. If you need to lower your cost you can always decrease your level of cover. If you'd like to consider a "level" premium (that does not increase with age) please contact LifeDirect. Importantly, your insurer can't increase your premiums if you become ill after starting your insurance.
- What is "indexation"?
Indexation means that every year your insured amount will increase with inflation. For example if you had $100,000 cover and inflation that year was 3%, then your cover would increase to $103,000. This makes sure that the amount of cover you have keeps up with increases in the cost of living. This increase is optional - you can decline it if you'd like. If you have selected a Stepped policy through LifeDirect then we will automatically include indexation for you. If you have selected a Level policy through LifeDirect then we will automatically remove the indexation option so your cover amount and premium remains the same.
Please chat to us about different options!
- What are my payment options?
The most common payment options are Direct Debit or Credit/Debit Card, and these are the two options available through our website. However, with some insurers there are other methods available (e.g. annual cheque), so please let us know when you apply if you'd like to choose a different option.
- When will I make my first premium payment?
Not until after your application has been assessed and accepted. If you choose to pay monthly (by Direct Debit or Credit/Debit Card) then you can usually select the day of the month that you'd like you premiums to come out. If you're not happy with the outcome of your application then you won't have to pay any premiums.
- What happens if I stop paying my premiums?
If you stop paying premiums, after a period of time (usually three months) your cover will end. If you ever need to change your payment details (e.g. you change bank accounts) just contact us and we'll get it sorted.
- Does my policy have a cash value?
No. Modern life insurance plans don't have any savings component to them, so your policy won't have any cash value. You will only receive payment in the event of a claim.
- Do I need to provide evidence of health?
Yes. The "underwriting" (medical assessment) will be based on the answers you give on our online application form. It is important that you include any relevant medical information that you are aware of. In some cases (but not all) the insurer may ask for further information or contact your doctor for medical notes.
- Do I need to see my doctor?
Usually not, however in some cases the insurer may request further information from your Doctor, send a nurse to complete an assessment, or ask you to have a check (for example a blood pressure test, if there is a history of high blood pressure). The insurer pays for any test like this.
- Are my health assessments free?
Yes. If an insurer requires further information (i.e. writes directly to your Doctor, sends a nurse for a consultation or asks you to have a check) these visits are generally paid for by the insurer. Note that if you already have outstanding tests, recommended by a doctor, the insurer won't pay for these.
- Does smoking affect my premium?
Yes, smoker's premiums are higher than those of non-smokers. The good news is that if you stop smoking, the insurer will lower the cost of your insurance (once you're smoke-free for 12 months you qualify as a "non-smoker": in the eyes of insurers!).
- What happens if I change my mind?
Not a problem. If you decide you do not want the policy you can cancel it within 14 days of receiving your policy document (this is known as the "free-look period"). A signed cancellation is all that is required. Any premiums paid during the free-look period will be fully refunded to you.
- What information do I receive?
Once your policy has been set up the insurer will send you your official policy document . We'll also store a copy of this in your MyLifeDirect client login area.
- What is my future service?
Each year on the anniversary of your policy we will be in contact with you to review of your policy. You will also receive a policy update from your insurer. We will also keep in contact with you via our email newsletter. We may also contact you from time to time with updates and special offers.
- What if my circumstances change?
It is important that you keep us up to date with any changes in your circumstances. Please keep us informed of any bank account or credit/Debit card changes as well as updating contact phone numbers, physical, postal and email addresses.
- What happens if I need to claim?
LifeDirect is here to help. If you think a claim might be needed, please contact us straight away. We will then contact your insurer and get the claims process underway.
- When does my cover end?
Your cover will end if you decide to cancel it or if you stop paying premiums. Policies usually have no expiry date (or expiry might be at a very old age - like 100) so you don't need to worry about your cover ending before you want it to.
- How does level Life Cover work?
When you start a life insurance plan you can choose between two types of premium: "rate for age" (also called "stepped") or "level". The difference is simple. Rate for age premiums increase every year with age, while level premiums don't increase at all (unless your cover level increases). Level premiums can usually be level until age 65 or 80 - after this they change to rate for age. We show rate for age on the LifeDirect site, and it's by far the most commonly chosen option.
The choice between the two comes down to the length of time a person wants to keep their cover. Rate for age is much cheaper at the beginning (around half the cost of level cover), but because it increases every year, in the very long term, for example if a person wanted cover through their 70's or beyond, it becomes very expensive. Level cover starts out much more expensive (usually double the cost of rate for age), but in the very long term can cost less.