Insurance might not always be top of mind, but it’s important to review your policies regularly with your financial adviser to make sure you’ve got the right cover.
Whatever your mix of cover — life, total and permanent disability, income protection and trauma — insurance can be an important part of protecting yourself and your family, now and into the future.
You probably don’t think about your insurance regularly, but there are certain times when you should consider updating your policies to make sure they still reflect your lifestyle and insurance needs.
When and why you should review your insurance
Insurance works best when you have the right level of protection for your situation and as your life changes, so might your insurance needs. You should consider reviewing your cover whenever your situation changes, like:
- taking on a mortgage to buy a property
- having children
- getting married, or dissolving a relationship
- upsizing or downsizing your home
- getting a pay rise or take a pay cut
- starting a business
- experiencing a change in your health or lifestyle
- paying off your mortgage
- stopping supporting financially dependent children
- joining an employer that may provide automatic insurance cover
- a period of unemployment
These milestones mark important times to review your insurance, including the amount of cover you have and whether your policy owners (who will receive your insurance in the event of your death) are up to date.
How to review your insurance
Insurance is flexible and can be changed to align to your needs. Below is a step-by-step guide to reviewing what you have.
Step 1: Read your insurance contract
Refer to your policy document and read it to fully understand what you’re covered for (death, disability or injury for instance) and compare this against what you’d ideally like to be covered for.
Step 2: Check any important dates for your policy
Check if your insurance policy has an expiry date, or if any of your insurance covers will change as you get older. It can be a good idea to discuss any important dates or changes with your insurance adviser, to ensure that you are not caught off guard in the future.
Step 3: Review your policy ownership
Your policy ownership determines who will receive your insurance payout in the event of your death or other event. It’s important to make sure that the people who own your policy are up to date so your money ends up in the right hands.
Step 4: Check if you have enough insurance
To help you work out the right level of insurance cover consider the following questions.
How much money would your family have if you were to pass away or become disabled? Consider the amount of money you have in super, savings, shares and other assets, and existing insurance policies as a starting point.
How much money would your family need if you were to pass away or become disabled? Consider the size of your mortgage and any other debts you have, as well as other costs such as childcare, education and day-to-day expenses you may be covering.
The difference between these figures should provide some guidance on the amount of insurance cover you may want to have. However, you might need to compromise between what you’d like and can afford.
Step 5: See if you have any other insurance policies
It’s a good idea to check any other policies you might have that contain insurance. Compare your cover, check whether you have any insurance double ups.
Step 6: Reduce or manage your insurance premiums
If affordability is a major concern, speak to your adviser to find out how you can manage your premiums without losing your policy. You might be able to:
- reduce the amount you’re insured for
- change how often you make a payment
- adjust your waiting and benefit periods.
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