The True Cost Of Life Cover

The cost of life cover is not as simple as it may appear, suggests Madeleine Koo in a recent article. Insurers bombard us with pitches for life insurance priced at $1 per day, but such covers may not prove the bargain they purport.

While little, per se, is wrong with ostensibly low-cost covers, consumers should be aware that they lack numerous important benefits or simply represent a face amount too low for a given situation.

Life cover is not a "one size fits all" product. Shoppers should assess their particular needs and investigate products tailored to their unique situation, whether that means, for example, higher levels of cover or a policy that pays out for disability or trauma.

Chris Eade of Lifebroker points out that $1-a-day and other seemingly cheap life covers might not be true bargains. Eade notes that the price for such covers relies upon bulk underwriting, rather specific risks. Therefore, the cover's price factors in the cost to insure high-risk individuals who take advantage of offers requiring only superficial health examination, if any. Lifebroker contends that low-cost covers based on group underwriting inflate the premium paid by individuals who might be rated favorably were the underwriting more intensive.

Click to read the full Financial Review article below: