The Life Insurance Premium Trap

Which nearly everyone who takes out a life insurance policy falls into.

If you located this website to seek a solution to premiums on insurance cover
you already have - which have become increasingly expensive

Maybe you've already fallen in to it yourself.

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If you don't read any other page on this web site - read this one.
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Jump to the
Life Insurance Premium Trap

Meet Clever Cloggs

Clever's one of those people who always seems to know more about anything than you do. You might actually have met him. Clever 'shops around' for everything and, when Clever recognised the financial security of his family could benefit from the sort of financial protection that can only be provided by insurance products, he went off to 'shop-around' for some cover.

To his credit, Clever did his best to research the types of cover available. But the more he researched, the more confused he became. Everyone he spoke to had differing opinions about the cover he should have and the insurer he should have it with. Even his bank and his accountant offered to arrange his insurance for him. He also found plenty of internet websites who guaranteed to get him the 'lowest' premiums for his cover. He was impressed that they could 'compare' costs from lots of insurers, some he'd never even heard of. Ultimately Clever found what seemed to be the lowest premiums and he arranged all his insurance for himself and his wife.

Clever was delighted with the job he’d done for himself and, as he usually did, he would regularly tell anyone he could find, (who'd listen), how his cover was the lowest cost. Sometimes he even suggested to his friends that they might like to do the same.

And everything was fine, for a few years. But, as time went on, Clever found that the cost of his cover was increasing every year and was becoming quite expensive.

He phoned the insurer to find out why his premiums increased by so much every year - in fact it was now costing Clever twice as much as it did originally - even though his cover hadn’t increased. But all Clever was told was 'that’s just the way it is' and there was nothing he could do about it.

Clever did some more research and found out that his premiums would soon be twice as much again as he was paying right then. And already this was already becoming a financial nightmare. Funny - he didn’t recall anyone telling him that when he first took his cover.

At one stage he 'shopped around' again to see if he could 'do better' on his life insurance premiums but found that all insurers were charging around the same premium for a person of his age and it wasn't worth switching. And that wasn’t all ...

His children were growing up and had become bottomless money-pits and after paying his everyday bills and mortgage and car and credit cards - it became obvious to Clever that some ‘cuts’ had to be made.

What Clever didn’t realise at the time was that he’d fallen into the
'Life Insurance Premium Trap'
but he was soon to find out … in the most tragic of ways.

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Meet Blind Freddie

Blind is your Mr. Average. Blind’s happy to do his job every day and look after his family and home the best he can. Like Clever Cloggs, he doesn’t have much spare cash and has to ensure he gets value for any money he spends.

One day Blind, recognised the financial security of his family could likely benefit from the sort of protection that can only be provided by Life insurance products. Blind realised that, unlike Clever Cloggs seems to, he doesn't know everything about everything. He also realised that the financial security of his family was something that had to be done properly. So Blind decided to seek professional advice from someone who specialised in providing the kind of security he was seeking - just as he would if he was seeking medical, financial or legal advice. After all, he reasoned, he didn't have to actually BUY anything if he wasn''t satisfied with the information he received.

Luckily Blind contacted us. After we listened to Clever's requirements we were able to suggested some solutions. But, more imoportantly when we illustrated the long-term benefit of the cover we suggested – and illustrated to him how he could save so much money over the long-term he was so impressed that both he and Mrs. Freddie completed the applications they received and mailed them back to us. After the insurer checked out their health, all their cover was accepted by the major Australian insurer we selected and they received their policy documents back in the mail.

Meet Blind Freddie

One day, Blind phoned us as he had become concerned, after talking to his mate, Clever Cloggs, at a barbecue, that he seemed to be paying a higher premium than Clever was for about the same cover. We reminded him that while he was paying a bit more up front over the long term he would benefit from this as his premiums wouldn’t increase like Clever’s were. Blind was reassured about how his cover was looking after him and his family over the long term, which is why he arranged it, and slept soundly that night – in fact he slept soundly every night.

It turns out that some time later, at another barbecue, Clever confessed that he was finding it a bit difficult to pay his insurance premiums at all because they kept increasing as he got older. Blind mentioned that he wasn't finding it a problem as his premiums hadn't increased since he originally arranged his cover and in fact it was actually easier to pay them now than when he first arranged his cover.

Apparently, Clever had admitted at the time that he wondered why no-one had told him about premium increases when he first took out his ‘cheap’ cover.

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Some years later …

Clever suffered a massive stroke - from which he ultimately never recovered.

His income immediately stopped and his wife was forced to make some serious cut-backs in expenses.

One of the major costs at that time was the Life Insurance policy. Even before Clever's illness, when he was able to work,there had been no possibility of being able to keep it going as it had become so expensive.

So, Clever's 'cheap' life insurance policy lapsed as the premium wasn't paid and all the premiums Clever had paid over the years were wasted - and it occurred to him one day how it was that all those life insurers were able to cover people for such a relatively little cost when they were young - and could offer all those incentives and 'freebies' to encourage people to 'sign up' right away.

And NOW he realised what a futile exercise it is 'shopping around' for the 'cheapest premiums' - because they don't exist.

By the time Clever passed away – the Clogg’s financial status was bordering on destitution. All their savings had been spent on medical expenses during Clever's illness, and the bit of money left over from the 'fire' sale of the house mostly went to pay for the funeral.

No-one’s seen or knows what happened to the Cloggs family since they were forced to sell up and move out of their family home.

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Blind Freddie was diagnosed with cancer - from which he ultimately never recovered.

His income also diminished during his treatment – but the premiums for his Life Insurance cover had, by this time, become relatively insignificant and it was easy to keep it going.

Sadly, Blind’s condition deteriorated to such an extent that his doctors decided that Blind was unlikely to survive for 12 months.

Blind contacted us about this as he was ‘getting his affairs in order’.

We reminded him that he had a ‘terminal illness’ benefit on his Life Insurance policy - which was designed to make the payment of the insured amount in situations just like the one he now found himself in.

We arranged for claim forms to be provided and assisted with their processing.

Shortly after, the Freddie’s received their payment from the insurer and they were able to pay off all their debts with enough money left over for the Freddie family to be financially secure.

Blind passed away shortly after - but at least with the satisfaction of knowing that his family was going to be OK financially without him - which was why he'd taken out his policy in the first place.

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The Life Insurance Premium Trap

Which nearly everyone who takes out
a life insurance policy falls into.

Clever Cloggs' story is almost a classic - something many people who took out life insurance a few years ago will soon begin to realise.

Compare the annual cost of Clever Cloggs and Blind Freddie's premiums

The yearly premiums shown below are typical of those used by
major Australian insurers for a male non-smoker.

Cover is for $500,000 and, for simplicity, 5 yearly intervals are shown
but premiums for Clever's cover increase every year.

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You don’t have to be Blind Freddie to see which option can suit you the best.