When was the last time you commenced your personal insurance reviews?
Your life insurance policy is an important investment in your future. It provides you and your family financial peace of mind in the event of an unexpected death, total permanent disablement or a severe illness or injury. But quite often our insurance policies are set, filed away and forgotten.
It is important to evaluate your existing policy(s) because, chances are, your life has changed since you commenced your recommended insurance cover.
The insurance industry has undergone dramatic changes over the last few years and without a review, you could be missing out on valuable information about the performance of your policies and potential gains from more current and cost-effective cover. A review of your cover is also a critical component of a sound financial planning strategy.
What does a review cover?
A review of your portfolio means a meeting between you and your insurance consultant where the contents of your portfolio are examined to ensure that your current cover is aligned to your current financial situation. You want to make sure that you are getting the most benefit possible out of your cover and that you have the right type of insurance to meet your specific needs.
During a review, it is important to address the following questions:
- Do your current policies provide adequate cover?
- Is your policy performing according to its original objective?
- Have the needs that prompted the purchase of your existing policies changed?
- What changes could be made to better meet your current needs and goals?
- Are your existing products comparable to the most cost-effective and competitive products that are available on the market today?
Annual reviews – why they’re a good idea
Reviewing your insurance policies periodically provides an opportunity to upgrade your policies and ensure that your cover remains comprehensive.
Insurance companies often review and upgrade their benefits to provide better cover to policyholders. For example, years ago the first trauma insurance policies only covered four major health conditions; heart attack, coronary artery disease, stroke and cancer. Today a comprehensive trauma policy will likely pay a benefit for 30-40 different health conditions.
It’s all in the wording…
The wording of policies may also improve which can make it easier to claim. Importantly, these improvements are not always passed on to existing policyholders.
Positive changes to your health may lower your insurance premiums. This could mean something as little as losing weight or giving up smoking. Some insurers even reward you for maintaining a healthy lifestyle.
Major life events such as marriage or a change in your family structure may also mean additional financial responsibilities. It is important that your insurance policy(s) adequately provide for all of your family in an unexpected event. On the other hand, as young children grow up and become more financially independent, there may be a reduced need to have provisions in place for them.
Changes to your employment
Perhaps your occupation has changed or you are self-employed. This often means greater responsibility, and possibly less of a safety net, as you may no longer have access to sick leave and other standard employee benefits. Having the right insurance plan can provide you with greater peace of mind that you will have financial support for your family if you suffer a disability and become unable to run your own business. A significant increase in your salary is often followed by a change in lifestyle. Reviewing your policies at this point also helps to ensure that you can still afford to maintain your lifestyle, even if you cannot work due to a severe sickness or injury.
Changes to your financial situation
Have you recently increased or reduced your debt? Increased borrowings or disposal of assets signal a good time to review your insurance policies. If you have increased your borrowings, whether it be for the purpose of extending the home, purchasing an investment property or gearing into investment, you should consider having adequate insurance to cover your debt position. After years of hard work, you may find yourself in a position where it becomes feasible to reduce your insurance cover.
With the insurance industry constantly evolving, it’s important to empower yourself and be proactive to ensure that you and your family are adequately protected. Over the years, there have been too many occasions where tragedy, near-death or another crisis was what it took before clients were motivated to review the topic of their insurance.
Your insurance consultant is there to simplify this process for you. They will compare insurance policies to ensure you get the best cover to meet your specific needs and provide accurate and up-to-date advice that will help you make informed decisions.
At DPM, we place business with most insurers in the market and are not tied to any organisation. We use independent research to assess companies and the products they offer, without compromising the quality of your existing cover. Is it time to review your insurance portfolio? Click here to arrange a time.
* The information contained in this site is general and is not intended to serve as advice. DPM Financial Services Group recommends you obtain advice concerning specific matters before making a decision.