5 common life insurance myths busted

Life insurance can provide peace of mind and security for you and your loved ones.

Myth #1: Life insurance is only beneficial once I die

There are many more aspects to life insurance than just a lump sum payout that goes to your loved ones if you die. Life insurance can help secure your financial future while you’re alive. For example:

Total & Permanent Disability (TPD)

TPD offers a lump sum payment in the event you suffer a serious injury or illness, become totally and permanently disabled and can no longer work. If you receive a payout from a policy, the payout can be used to clear debts, or pay for ongoing needs such as the rent or mortgage, or additional medical and care expenses.

Income Protection insurance

Income protection policies offer a monthly benefit, calculated as a percentage of your income (usually up to 70%), to help cover ongoing expenses during the period you can’t work. This can help you to pay your family’s ongoing costs such as groceries and child care, while you focus on getting back on your feet.

Critical Illness cover

This form of life insurance offers a lump-sum payment if you're diagnosed with a critical illness that’s covered by your policy terms. Such illnesses commonly include cancer, heart attack or stroke. It can help cover medical expenses, lost income, and other financial obligations.

Myth #2: Life insurance is unaffordable

One of the biggest myths of life insurance is its cost. For many, buying a policy when younger can be more cost-effective—especially if you do not have pre-existing conditions.

Life insurance premiums are affected by a number of factors including your general health, age, gender, smoking status, alcohol consumption and lifestyle factors.

Good to know: through the TAL Health Sense program, policy savings can be secured of up to 15% for maintaining a BMI of between 19 and 28.

Myth #3: You can’t get coverage with a pre-existing medical condition

Depending on your medical history and the nature of the product you are applying for a pre-existing medical condition may not prevent you from securing a policy that brings peace of mind for you and your loved ones.

When applying for life insurance with one or more pre-existing conditions, an insurer may request additional information about the nature of the condition before making a decision. You may need to answer additional questions, go through a medical examination or they may need to write to your doctor for details about your medical history.

Depending on your individual circumstances, you may be able to:

• Be covered for the condition under your policy.
• Get a policy that covers a pre-existing condition but for which you’ll have to pay a higher cost.
• The condition may be excluded but you are otherwise covered by the terms of the policy.

Myth #4: You can’t get coverage if you smoke

Generally the same cover is available for smokers and non-smokers. However, it is true that the difference is usually in the price. In general, smokers tend to pay more for cover.

To ensure you’re on the correct policy terms, be sure to provide your smoking status to your insurer when you apply for insurance so they can consider the impact this might have on your policy.

If you haven’t smoked in more than a year, get in touch with your insurer to let them know. You may be eligible to apply for a reduction in your premiums.

Myth #5: Life insurance companies don’t pay out

There’s a common misperception that life insurers will do everything they can to avoid paying claims. Life Insurers are bound by a duty of good faith and assess claims based on your policy conditions.

At TAL, supporting our customers and their loved ones is our top priority. In the 2023/24 financial year, we proudly paid out a total of $4.2 billion in claims to 50,128 of our customers.

To learn more about life insurance, and design a level of cover that suits you, try TAL’s Coverbuilder.