Life Plan/Life Insurance Policy

Any advice, what do i need to know or have at the back of my mind before going out shopping for some sort of life cover.

Products/Companies/common pitfalls and salesmen gimmicks????

No real gimmicks except you need to know about premium patterns. In general terms there a level patterns and those that escalate, some quite drastically. Basically how it works is the actuaries will calculate your life expectancy based on info you provide (age, gender, health etc). Then they will calculate what premiums they need to charge you. Then you will have a choice as to how these premiums are applied. An aggressive age related type of premium pattern will have cheaper initial payments but will get hectically expensive later on. A level premium pattern will start out more expensive but not increase heavily later.

In other words you can choose to subsidise future payments now of not. Discovery like to show you the 'cheap' monthly premiums but aren't so good at explaining how the rip you a new one later.

Agents will try to sell you "whole life" cover cos the commission is based on the value and length of term.

I dont believe anyone needs whole life cover. We usually require specific amounts of life cover during certain times of our lives. single, dont have much debt dont need much cover. married, young kids,house, car loans etc..need more cover. grown kids, house paid for etc, reduced cover.

So rather take x amount for 5 years or 10 years(called term cover) at a flat monthly premium and add to it if you need or reduce when the term expires.

Also life cover is not like home/contents insurance. You can have duplicate policies.

Whole if life cover is not sold because of commision, its sold if there is a need for it. Both Whole of Life cover and Term Cover have their places - beware of using them incorrectly.

What you need to do is see a Financial Planner. Ask to see his permit if he doesnt show it to you straight away. What he should do is a needs analysis and will ask questions and take notes. What he is trying to do is get as much information about your unique situation so dont skimp on giving info. Then he/she will get back to you with a plan to take care of your needs.

Of course there are bad apples everywhere. Understand premium patterns, understand the difference between accelerated and stand alone cover.

Also consider that some companies offer a terminal illness benefit. This means that, should you be diagnosed as terminal (less than 12 months to live), they pay out your policy. This can be a godsend if you happen to have some unforeseen complications. You could also have some extra cash to take your family to Disney Land or do something you've always wanted to before your time comes.

I'd recommend getting the policy in place sooner rather than later. If you suddenly develop an issue like high blood pressure, many companies will simply refuse to cover you or load your premiums excessively. That's one of the main reasons I got my cover while I'm still young and healthy.

Nocturnity said:

That's one of the main reasons I got my cover while I'm still young and healthy.

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This is very wise. Many people put off getting cover not realising that not only does it get more expensive but an unforeseen circumstance could render you uninsurable.