We’ve all seen the TV life insurance adverts proclaiming another ‘amazing offer’. But how well will they really protect your loved ones when they need it the most, and are they really as economical as they proclaim?

Our TV screens often bombard us with infomercials promoting ‘easy-to-get’ life insurance offers and claiming to have ‘great value’ premiums. These offers may also come through the mail from a bank or other institutions.

They may sound enticing, but what are they really offering and are they genuinely good value? Scratch the surface to reveal the truth and some real question marks may emerge.

“Instant cover with no medical” – too good to be true?

Such life insurance offers often spruik the attraction of obtaining cover right away with no need to answer lots of medical questions or take any tests. It certainly sounds attractive to avoid the hassles in securing cover, but think for a moment – how they can make such an offer?

If the insurer is not able to assess the risk of each person they insure then ultimately there must be either some restrictions within the cover you are buying, or perhaps the premium rates are not so economical after all.

The reality of any life insurance policy is that they need to be financially viable for the insurer. There is no such thing as a free lunch.

If they are not vetting policyholders for things like pre-existing conditions then they must take some other offsetting action either on narrowing claims opportunities or charging higher premiums.

What will often be the case with such offers is that they only offer cover against accidental death, with no cover against death by illness. Such a limitation may last for the first few years of the policy or in some cases for the entire policy term.

Will ‘accident only’ cover leave you short?

While you may feel that just covering against accidents is all the protection you need, consider the statistics on causes of death. The Australian Bureau of Statistics report that the top 17 causes of death are all related to illnesses and have nothing to do with accidents.

Accidental falls ranks as the 18th most common cause of death, well below illnesses, such as various types of heart disease, cancers, stroke and respiratory diseases. This is not to say that having coverage against the misfortune of an accidental death is not important, but if that is all that your policy is covering then there could be significant gaps in your family’s protection.

By only covering the unlikely event of death by accident the insurer can avoid the complication of asking questions about your health simply because they know that accidents are not generally related to how healthy you are. In other words, they know that claims will be relatively unlikely.

What about the cost?

Even if an offer does cover death by any cause and not just accident, you still need to be wary of the cost. Many of these offers will try to illustrate that their cover is low cost by breaking it down to a weekly figure.

However, when you actually compare the cost against policies which do make an assessment of your health before they offer cover, then you may discover that the cost isn’t so low after all.

Will you be able to buy sufficient cover?

Another aspect of such offers is that they will often limit cover to set amounts or units of cover. While an offer of, say, $100,000 cover may sound like a lot of money, it may well be only a fraction of the amount of cover you really need. When it comes to protecting your family’s future security and lifestyle, the amount of cover you put in place is not something you want to skimp on.

Proper comparisons and professional advice can make a difference

Here are three reasons why it is important to use a professional financial planner if you want to get serious about protecting your family’s future:

  1. They will take the time to assess your insurance needs to ensure your financial protection properly reflects the financial value of your life,
  2. They will only offer cover that provides appropriate protection for your specific circumstances, and
  3. They will help keep the cost to a minimum by comparing a range of quality insurers.

Your security and the security of your family is not something that should be trusted to insurance sold through a TV advertisement. Get sound professional advice and give them the protection they deserve.

Have you had a bad experience in buying insurance through ‘special’ direct response offers? Join the discussion below.