Holiday season a good time to review life insurance

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MEDIA RELEASE: The holiday period is a good time for people to assess their financial needs and plans for the year ahead, including whether they have adequate life insurance coverage, according to HLB Mann Judd Insurance Services’ key risk adviser, Andrew Kennedy.

Mr Kennedy said this is particularly true at the moment, with the industry experiencing unprecedented premium volatility and changes in insurance policy benefits.

“Insurance cover is often either overlooked altogether or reviewed too infrequently, which can mean that insurance plans are now deficient.

“It’s critical to make reviewing insurances part of a regular routine as people transition through life stages. The most common triggers for changing or taking out life insurance are starting a family, buying a new home and starting a new job in a higher income bracket, but even self-funded retirees can often have insurance needs after they finish work.

“The key point with insurance however is it’s not a set and forget strategy and instead needs to change over time to reflect your changing circumstances. People need to insure and protect their ongoing ability to earn an income…life insurance is so cheap compared to motor vehicle insurance yet everyone insures their car,” he said.

Structural changes to life insurance policies have resulted in many policy definitions changing. An Australian Prudential Regulation Authority intervention on income protection to improve sustainability guidelines has resulted in many features and policy benefits being removed or altered.

“Despite this however, there has also been large premium increases, particularly for insurance held in industry super funds,” he said. 

Some life insurance premiums have increased by 40 per cent or more in recent months, while the transparency of insurance-related information on super statements is a concern, according to Mr Kennedy.

The government has also made changes to eligibility for insurance cover in super, with some members unaware they had been exited from the cover automatically, only to learn they don’t have adequate cover upon making a claim or when it’s too late to get it back. 

“Existing life insurance cover needs to be reviewed regularly. Financial advisers, particularly risk specialists, are well-placed to help clients with this part of their overall financial strategy, and compare the market for policy wordings. 

“They can then provide a detailed recommendation based on the client’s particular situation, and manage the application process. If a client needs to claim, the adviser should be acting as their advocate in making the claim,” he said.