Why it's important to have your life insurance reviewed

Whether it's guaranteeing payments on a mortgage or providing an ongoing income stream to loved ones, most of us know as we take out life insurance what we're looking to protect, should the unexpected happen. These responsibilities have dollar values, and so are relatively easy to assess, but the value associated with these commitments changes regularly, therefore it is vital to review the amount you're covered for periodically. Technically speaking, the amount of cover that you have should be a regularly changing value, morphing to match your circumstances and assets.

Reasons to review your insurance policy

There are a number of reasons why it's prudent to take the time to have your policies reviewed by an insurance specialist. Some of the main reasons for doing so include:

Increased competition and premium reductions amongst life insurance companies
Constant improvements to life insurance policies
Your ever changing needs and objectives

The life insurance marketplace in Australia is constantly changing – now, more than ever, it's an open market with direct competition between specialist life insurance companies and the major banks' insurance divisions.

Amount of insurance benefit

A policy should allow for benefit amounts to be freely reduced without underwriting (i.e. providing extra medical or financial evidence to your insurer) and therefore without too much hassle from your perspective. However, if you'd like to increase your benefit amount, most of the time you will be required to provide further evidence that you are fit and healthy.

Life insurance companies generally target specific sectors of the Australian population and this varies from company to company. Some companies target younger potential policy holders (25-40 year olds) in order to cross-sell mortgage and investment products, and therefore might offer cheaper premiums. Other companies target more mature consumers, particularly those approaching retirement. Given this differentiation, it's vital to ensure that your life insurance company is still offering you the best rate available. If you choose to undertake your policy via a broker, ensure that the broker is unbiased and has access to all of major life insurance providers.

Staying under cover: The Guaranteed Upgrade clause

Better policies in the life insurance market have a "guaranteed upgrade" clause, which states that all future improvements to the policy will also apply to existing policy holders. If you're looking to the long term when undertaking a policy, it's crucial to ensure that your policy has this clause. This is particularly important if you are undertaking a premium life insurance policy.

In the past ten years circumstances under which a claim can be made on a trauma insurance policy have improved. Previously there were just ten conditions for which a policy holder could be disagnosed in order to claim – now there are almost 90 conditions with some policies. It's important to ensure that you are getting what you're paying for.

If you're not certain exactly what your policy covers speak to your insurer and ask specific questions. If you need extra peace of mind, speak to an independent advice body or even a broker with extensive experience and unbiased standing. It's better to be safe now than sorry later.