Your personal insurance is an important part of your financial plan as it provides peace of mind and financial protection to you and your family in the event of death. Often Total and Permanent Disablement cover is also ‘bundled’ with Life insurance, this covers the scenario where you are unable to work due to total and permanent disablement, injury or illness.
Reviewing your insurances is important as your needs and circumstances change over time. There are many reasons why you may wish to review your insurances. We’ve compiled a list of the top 5 reasons to review your personal insurances:
Insurance premiums are generally calculated based on factors such as your age, health status, occupation and smoking status. If you change occupations, your cover may no longer be appropriate and in some cases may not provide cover for your new occupation.
If you’ve received a pay rise, you may need to review or increase your income protection sum insured.
If you have given up smoking (generally for a period of 12 months or more) you may wish to advise your adviser or insurer as it could result in the premium reverting to non-smoker rates, which will lower the premiums you pay.
Other positive changes to your health including weight loss may also lower your insurance premiums.
If your health has deteriorated since you first took out your insurance, it may be difficult to obtain increases or make changes to the provider or type of insurance. Changes generally require you to undergo medical underwriting. Therefore, if you are considering making changes to your insurances it is very important that you do not cancel existing policies until new applications have been accepted by the insurer and are in force.
Major changes to your circumstances such as marriage, divorce, loss of a loved one, or the birth of a child will generally necessitate a review of your insurance needs.
A new baby will generally mean additional financial responsibilities, whilst 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 divorce or the loss of a loved one, you may wish to review the level of cover and the nominated beneficiary/ies for your policies.
The purchase or sale of assets and an increase or decrease in borrowings generally signals time 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.
Insurance companies often review and upgrade their policies to provide better coverage to policyholders and to remain competitive within the industry. Insurance companies may increase policy definitions or offer cover under broader definitions which can make it easier to claim.
These improvements are not always automatically passed onto all existing policy holders. It can pay to check whether the policy has a “guaranteed upgrade” clause, which states that future improvements to the policy will also apply to exiting policy holders.
If it’s been some time since you last reviewed your insurances you may wish to review them with your financial adviser who can review your insurance needs and determine whether the current cover and policies are adequate.