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.
Thanks to the ability to pay for insurance through super, an estimated 94 per cent of working Australians have some level of life coveri. So it’s a good idea to review your insurance regularly to make sure you have the right type of cover—and enough of it.
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
– 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 a new super fund that may provide automatic insurance cover
These milestones mark important times to review your insurance, including the amount of cover you have and whether your beneficiaries (those 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 product disclosure statement (PDS) 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 the insurance policy expiry date
Check if your insurance policy has an expiry date, and if so, make note of when it is so you’re not caught off guard. It can be a good idea to set yourself a reminder a month or two before it’s due so you can contact your insurance provider ahead of time.
Step 3: Know your beneficiaries
An insurance beneficiary is the person, or people, who will receive your insurance payout in the event of your death. It’s important to make sure your beneficiaries 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.
1. 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.
2. 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. We can help you crunch the numbers to ensure that your coverage meets your needs.
Step 5: See if you have any other insurance policies
Like many Australians, you may have insurance through super. So, it’s a good idea to check this against other policies you might have outside super.
Then compare your cover, check whether you have any insurance double ups – if you have more than one super account with the same type of insurance, you may be paying for more insurance than you need.
Something to note on your TSC insurance, you’ll most likely only be able to claim up to 75% of your pre-disability income, regardless of whether you have TSC cover within multiple super accounts.
Changing your insurance policy can be complicated, so it helps to have an expert to talk things through with. We are here to help.
i Rice Warner, Life insurance adequacy, paragraph 8.