Reviewing Your Insurance As You Get Older
So, you are seriously starting to think about your retirement. The kids are finally more independent, the mortgage is less than it was, and Superannuation balances are more than they were.
When you look at your monthly bank statements and one particular debit is always there. The insurance premium. You have been paying it diligently for years now, maybe decades. But, for what? You’ve not claimed and ‘gained’ anything so far.
At this stage and age, it might be very tempting to cancel your policies and save a few dollars. Before you do, just consider what you could be losing in a future that’s not yet written. It could be hundreds of thousands of dollars. More to the point it could be your home, your lifestyle, or your health - the very thing you are hoping to protect.
Statistically you are more likely to claim the older you get:
Type of cover Average age people Average age people
cancel policy make a claim
Income Protection 45 46
Total & Permanent Disability (TPD) 49 48
Trauma Insurance 44 49
People often don’t realise an insurance policy is not an ‘all or nothing’ concept and there are options available. For example, as you get older and your debts and commitments reduce so might the level of cover you require. When cover is reduced, so is the premium. Take care though, once a policy is in place it’s easy to reduce the cover but much harder to increase the amount. It often only takes a phone call to lower the amount but countless medical tests to increase it or apply again.
Before rushing off and reducing cover, it’s important to tailor the amount of cover to your potentially changing circumstances, and this is where your financial planner can help.
There are many other options that may be available including requesting a temporary freeze on the premiums; paying annually instead of monthly; moving your cover into a superannuation fund; or changing policy waiting or benefit periods.
The basic idea of insurance is not to put you in a better position than you were – it’s there to protect what you have. Regardless of what age you are, think twice about cancelling insurance completely unless protection is no longer needed. There are usually other options available.