When you purchase a vehicle from a car dealer, you'll probably be offered a whole lot of extras. While an alarm system or GPS navigation may be worth forking out extra for, one add-on you should avoid at all costs is life insurance.
Drawing on the results of an ASIC investigation - which found that customers who buy life insurance through car dealerships generally wind up with lemon policies - this guide will run through the pitfalls of saying “yes” and reasons why you should politely decline.
Let’s face it, thinking about what will happen to your loved ones when you die is a somewhat macabre thing to do. However, it’s well worth the thought, as settling on a suitable life insurance policy could help your family out financially, if unforeseen events down the track mean that you cannot look after them (those having doubts about it should read this).
That being said, it’s not the kind of decision you should be making in a car yard. Here’s why, according to research conducted by ASIC in 2016...
But of all the add-on life insurance flaws pointed out by ASIC, the following one would have to be up there as the worst…
On the plus side, the consumer watchdog has warned the life insurance industry to clean up its act or it may take disciplinary action. ASIC has called on insurers to address the high costs, poor value and poor claim outcomes that come part and parcel of the life insurance policies being sold at car dealers.
Some insurance providers have responded well to the investigation and said that they’re working on it.
Did you know, that ASIC conducted a review into the life insurance industry as a whole? Check out our guide on what it means here.
Ready to buy a life insurance policy with a considerably lower price tag (yet higher level of cover)? It’s easy to shop around here at Mozo, with several providers listed on our site for you to compare from. So don’t get taken for a ride at a car dealership and follow these three steps instead...
1. Know what to look for. Before you start comparing away it’s a good idea to calculate how much your dependents rely on you financially, and what they’d need to survive on if you died prematurely. Doing this will help you determine how much life insurance you need.
2. Compare online. Shortlist policies coming with your favourite features, which may include pay on time discounts, advance payments or quick application features. Then you can kick off those enquiries and receive quotes.
3. Read the fine print. Never mind tediousness, it’s always worth trawling through the fine print, as you never know what could be hiding in there. For instance, insurance providers are known to define terms differently from one another, such as the definition of a heart attack. Then once you’re happy, submit your application so you can put your mind at ease!