Most people understand the need for life insurance. Our industry often uses the analogy that people would never consider backing their car out of the driveway unless it is insured but are more than happy to not insure their greatest assets – their life and their ability to earn an income.
Articles in these pages regularly outline the types of life insurance available and why it is important to have this insurance. I don’t particularly want to rehash the same information again. Today, I would prefer to focus on those people who have already recognised the importance of life insurance and who have policies in place.
The life insurance market has become very competitive in recent years. New products are being developed all the time and new features are being added to products regularly. Life insurance companies are offering in many cases better products at lower cost.
Like many things in life, insurance should not be ‘set and forget’. Making the decision to adequately cover yourself and your family in the event of an unforeseen accident or sickness is to be applauded. Not reviewing the insurance regularly can be very costly.
If you took out your policy more than five years ago, it is possible that it has been superseded by an alternative, more cost effective policy. The definitions of what constitutes a successful claim on the policy may well have also been broadened.
It is also possible that for some policies, there may now be a more tax effective method of ownership. Your super fund could pay the premiums for the insurance policy, rather than paying for them out of your own pocket.
Also the amounts of insurance cover you applied for may no longer be suitable. Kids grow up, debt amounts change, salaries change. These can alter the need for insurance.
As part of a regular review of your financial position, your financial adviser should also be reviewing your life insurance. It will not take them long to obtain indicative quotes for currently available policies in order to provide a comparison to your existing policy. They can also consider whether or not you have the correct amounts of cover. Provided you are reasonably fit and healthy, commencing a new policy or altering an existing one, can be a straight-forward process and may save you thousands of dollars.