Insurance is designed to provide protection to manage risk, uncertainty and unexpected events in life that may lead to financial loss.
When you buy insurance, you transfer the financial cost of a potential loss to the insurance company for a fee, known as the premium.
The three main types of insurances are personal, general and business insurance.
Personal insurance provides protection such as Life insurance, Total & Permanent Disability insurance, Trauma insurance and Income Protection insurance. It also includes Private Health insurance (hospital and extras cover) that you may hold.
Business insurances protects capital, revenue and assets of the business as well as key staff. It’s also designed to reduce risk exposure through Public Liability or Professional Indemnity insurances.
Insurances should be personalised to your situation and needs. It is good practice to review policies on a regular basis to ensure they are competitive and reflect changes to your personal and family situation, health, career, finances, income, level of assets and debt and health circumstances. A regular review also reduces the risk of finding yourself under-insured or over-insured if your circumstances have changed.
Here are 5 simple things that you can do when reviewing your insurance policies:
1. Put a reminder in your calendar for a month prior to the renewal dates of your policies. This will give you plenty of time to review.
2. Review your current level of insurance. The sum insured and type of cover against your current needs. If you are concerned about this you should speak with your adviser.
3. Make sure the information you’ve provided to your insurer or financial adviser is still up to date.
4. If you’re comparing options, don’t focus on price alone. Each policy provider offers a range of features and benefits so make sure you are looking at all the inclusions and features of the policies you are comparing.
5. The insurance market is very competitive and sometimes you may be able to access a better premium rate, or switch to a new policy with additional features. Be careful to ensure you do your homework before making any changes though to make sure you’re not losing any benefits. This is where good quality advice can really make a difference.
Reviewing insurance on a regular basis is a good habit to get into and an important part of managing and protecting your financial future. Always remember to seek expert advice if you’re unsure or before making changes.
Any significant changes in your personal circumstances is a great time to review insurances, for example if you have had a new family member arrive, you have bought or sold a house or your employment circumstances have changed.