28 Sep 2016
If your policy lapses, you may face more challenges than being unable to claim when you need to.
If you let your insurance lapse, you may be in for a surprise down the track. Because letting your cover lapse can mean more than no longer having your cover in place. You need to think about whether you’ll be approved or rejected for the same cover if you decide to reapply in the future.
Depending on your age and the state of your health, you may be refused cover later on. And because things change, keeping your cover in place—even when you don’t feel a need for it as much as you may later on—can be insurance in and of itself.
But it’s important to understand other factors that can influence your insurability. Because it’s not just age and health that govern new insurance applications.
For example, if and when legislation changes, some policy optionsi held in super are no longer available for new applicants. So for some people, that means cover that was once in place and then lapsed is now gone for good. And this can apply to insurance outside of super too.
It pays to think long term
If you let your insurance cover slip and restart, you may have to serve waiting periods and be unable to make a claim when you really need to.
And keep in mind that based on claims statistics, once you’re over the age of 50 there is a higher chance you’ll need to make a claim on your policy. According to AMP Life Limited’s retail claims in 2015, 2% of claims were made by people under 30 years of age and 31% per made by those aged 50 – 59. People over 60 made 41% and those aged 30 – 49 made up 26% of all claims.
The real costs
One of the main reasons people let their insurance lapse is to save money. But not being covered for an event that totally disrupts life as you know it can be far more expensive than the cost of a policy.
It’s worth discussing the long-term value of your insurance and your personal situation before you let go of any cover you have in place.
And, there are ways to manage the costs of your policy. Come and speak with us before deciding whether or not to let go of a policy you have in place. And if you may have let your policy lapse, we may be able to help restore it.
Making insurance affordable over time
Insurance through super
There are two key ways to hold insurance. You can hold your insurance through your super fund or outside of super, although some policies cannot be held in super such as trauma protection.
Buying insurance through super means you don’t have to pay for your policy from your household budget, although it does come out of your super money and there can be tax implications. We can help you work out whether holding insurance through super is the best option for you.
Actively managing your level of cover
There’s a difference between keeping a policy in place and the level of cover provided by the policy. And remember, you don’t have to keep the same level of cover in place forever.
The key is making sure your cover always meets your current needs. But it’s essential not to be underinsured at the same time.
You could save on the cost of your policy as your needs change. For example, say you have children and they leave home or your debt levels reduce—your exposure to financial risk may be less than it was and therefore these are key opportunities for scaling down your level of cover.
Working out what’s right for you
Insurance can give you peace of mind at every stage of life. The key is to keep the right level of cover in place at the right time and to understand any risks you may be facing at different stages. Contact us today and speak with one of our Advisors us so you have peace of mind that your cover will be in place when you may need it most.
