Personal Insurances | 25th November 2015
Our lifestyle, health and income are the building blocks of our wellbeing. To protect your current way of life and the lives of those around you, it is important that your level of risk protection remains appropriate to meet your needs.
As change is the only constant in life, the longer it’s been since you reviewed your insurance policies, the greater the chance of a mismatch between your current cover and current needs. The insurance strategy that you have in place took into account where you were, so it is imperative that your strategy is continuously and periodically reviewed to reflect where you are.
To help ensure that your personal insurance cover remains aligned with your circumstances, we’ve highlighted the top 6 life changes that constitute cause for review:
1. Changes to your income
For most working Australians, our ability to earn an income is the most important financial asset we have. As we earn more money, we naturally become accustomed to a more comfortable lifestyle, so it is important that our level of insurance takes this into account. Even small increases can be cause for a review, and sometimes you are able to increase your level of cover without medical underwriting. Conversely, if you are decreasing the amount that you work in the lead up to retirement and are passed the most expensive stage of your life, your need for insurance may be less than the insurance you are paying for.
2. Lifestyle changes
If you were a smoker when you took out your personal insurances, then your premiums are based on ‘smoker rates’, which are always considerably more expensive than ‘non-smoker rates’. If you have since given up smoking (for a period of 12 months or more), then there may be scope to save a significant amount of money in insurance premiums.
Additionally, if you were a thrill seeker at the time of application, your policies may have exclusions for specific high-risk activities such as motor racing, hang gliding, rock climbing, rugby etc. If you no longer partake in these activities, removing these exclusions can improve the comprehensiveness of cover.
3. There have been positive changes to your health
Additionally, if your policies were implemented with either a medical loading or exclusion and your health has improved since that time, you may find that reviewing your insurances will provide you with cheaper and/or more comprehensive coverage.
Key examples of health improvements include losing weight, cessation of an injury (shoulder, knee, and back exclusions are common), and even mental health improvements (post-natal depression, anxiety, etc). A confidential chat with your financial adviser will help identify these opportunities.
4. Your family situation has changed
Major changes to your circumstances such as marriage, divorce, loss of a loved one, or the birth of a child could necessitate cause for review of your insurance needs. A new baby could mean additional financial responsibilities, and as children grow up and become financially independent, there may be less of a need to have insurance provisions in place to provide for them. In the event of the loss of a loved one, you may wish to review your level of cover or update the beneficiary nomination on your policies.
5. You’ve taken on more or less debt
The purchase or sale of assets and an increase or decrease in borrowings may be a signal for a review of your levels of cover, as sums insured often take into account your level of liabilities that would need to be repaid (if no assets are sold) in the event of death, disability, illness or injury.
6. It’s been a long time since you reviewed your policies
Insurance companies often review and upgrade their policy definitions to provide better coverage to policyholders and to remain competitive within the industry. As these upgrades aren’t always passed on to policies already in force, reviewing your cover can ensure that your policies remain competitive on both comprehensiveness and price. So if it’s been some time since you last reviewed your insurances, review them today with your financial adviser to see if you can get a better deal.
This information may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. You should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation & needs before acting on it. Where the information relates to a particular financial product, you should obtain & consider the relevant product disclosure statement before making any decisions.
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