Life Insurance

There are three forms of life insurance policies:

Term life insurance
Whole-of-life insurance
Endowment insurance

Details of the policies are set out below:

Term life insurance

Term life insurance is the most common form of life insurance purchased in Australia. It provides a lump sum payment to the policy owner or nominated beneficiaries in the event that the life insured dies while the policy is in force. In many cases, an advanced payment is made if the insured is diagnosed with a terminal illness and has a life expectancy of no more than 12 months.

Term life insurance can be used to financially protect your family should you die prematurely. This is often done by selecting a level of cover that is sufficient to pay off any existing debts and/or provide an investment amount to generate a future income stream on which dependents can live.

We use needs analysis to advise clients which company's policy and selection of benefits will most suit their requirements. The premium cost largely depends on the insurance company's policy definitions along with the age of the insured, the sum insured selected, the additional benefits chosen and whether stepped or level premiums should be paid. We additionally analyse if it may be beneficial for you to obtain term life cover through your superannuation fund.

Harlocks can quote from all leading Life Insurance Companies. Our advice is based on the most suitable policy for your needs, while allowing you flexibility to choose a policy to accommodate your financial position. When quoting we provide a full Statement of Advice (SoA) which provides a comparison between companies, policies, definitions and premium cost. This allows our clients to make an informed decision based on our advice, while ensuring that the policy best suits their needs.

For more information or a quote on this product please contact us.

Whole-of-life insurance

Whole-of-life insurance combines life insurance with a savings/investment element. They are considered to be a permanent form of insurance as there is no specific maturity or expiry date. The premium payments may cease, e.g. at age 60 or 65 depending on the contract selected.

Whole-of-life policies contain a non-forfeiture provision, whereby if premiums are not paid for any given year, the life office will advance the premium as a debt against the policy in order to continue the policy. Interest is charged on the debt. The advancement of the premium amount continues, as long as the policy's cash value exceeds the premium debt and its associated interest charges, otherwise the policy will lapse.

Whole-of life policies can be initially expensive when compared with term life insurance and may only be required if life protection is required right through to the end of your normal life expectancy.

Whole-of life policies have lost popularity over the past decade. Only a handful of underwriters actually offer whole-of-life policies. The main reasons for the decline in popularity are:

	Improved term life insurance terms and conditions
	Growth of superannuation
	Whole-of-life insurance used to marketed as an investment vehicle, however, real investment returns over the1990's declined
	Surrender values in the early years were often less than premiums paid

These policies are similar to whole-of-life except that a benefit is payable on a specified date (maturity) or on the death of the insured, whichever comes first. They are a combination of life insurance and an investment policy. The actual payment will depend on the investment performance, the level of premiums paid and the length of time held. The maturity value is comprised of the guaranteed sum insured plus any annual and final bonuses.

They can be used for many purposes such as:

	saving for retirement
	repayment of a debt if death occurs before the loan is repaid
	providing funds for travel or for any future purposes which require funds, such as childrens' education
	providing children with a financial start in life

Endowment policies usually carry higher premiums than whole-of-life insurance because maturity value is realised earlier. If the insured person dies before the maturity date, then the sum insured plus bonuses from the endowment policy will be paid to the beneficiary or policy owner.

Endowment policies have also experienced a steep decline in popularity for similar reasons to those for whole-of-life policies. The main reasons for the decline in popularity are:

	Improved term life insurance terms and conditions
	Growth of superannuation
	Whole-of-life insurance used to marketed as an investment vehicle, however, real investment returns over the1990's declined
	Surrender values in the early years were often less than premiums paid

Harlocks can quote from all leading Life Insurance Companies. Our advice is based on the most suitable policy for your needs, while allowing you flexibility to choose a policy to accommodate your financial position. When quoting we provide a full Statement of Advice (SoA) which provides a comparison between companies, policies, definitions and premium cost. This allows our clients to make an informed decision based on our advice, while ensuring that the policy best suits their needs.

For more information or a quote on this product please contact us.