Why it's important to have your life insurance reviewed
Whether it's guaranteeing payments on a home loan or providing an ongoing income stream to loved ones, many 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. Generally speaking, the amount of cover that you have could 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
Some policies 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 a competitive rate. If you choose to undertake your policy via a broker, ensure that the broker is acting in your interests and ask why certain products are being recommended and how many products and providers they have access to.
Staying under cover: The Guaranteed Upgrade clause
Some 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. So you may want to ask your insurance company if this is included on your policy or prospective policy.
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, you may also want to speak with a broker with extensive experience. It's usually better to be safe now than sorry later.
This article is about life insurance and is general information only. It should not however be treated as factual, as personal advice or be the basis of purchasing any insurance policy. Before deciding on an insurance policy read the PDS carefully and talk to a licensed insurance agent if you need further assistance. MoneyBuddy does not recommend insurance products or provide personal advice in regards to insurance products.