What happens if I let my insurance lapse?

Like many Australians you may be wondering if your cover can adapt to your needs.

If you let your insurance lapse, you risk being unable to make a claim when you may really need to. Take a look at our claims statistics below and you’ll see that, more often than not, it’s our older customers who understand first-hand the true value of their insurance.

Life claims by age
Under 30 years
6%
30 to 39 years
12%
40 to 49 years
18%
50 to 59 years
30%
60 years+
34%

Source: Claims Paid 2013, AMP Life Limited and The National Mutual Life Association of Australasia Limited Claims

Based on the statistics above, if you’re over the age of 50 there is a higher chance you’ll need to make a claim on your policy at some point in the future. So it’s worthwhile considering the value of your insurance and your personal situation before you let it go.

Health, age and changing legislation

If you let your insurance lapse, you need to think about whether you will be able to get the same cover back again, should you ever want to. And it’s important to know it’s not just age and health-status that can affect a new insurance application.

As an example, new legislation means some policy options1 held in super are no longer available for new applicants at all. So for some people, cover that was once in place and then lapsed is now gone for good.

Investing where it counts

As your dependants leave home and your debt levels reduce you should probably reconsider the level of cover you need and have. While you need to understand your own circumstances and changing needs, often one of the main reasons customers let their insurance lapse is to save money. An insurance policy can seem like an unnecessary expense and with any luck it may not be necessary at all. But ironically, not being covered for an event that actually happens can be far more expensive than the cost of a policy.

There are a few ways to manage the affordability of insurance.

Insurance through super is an option where you don’t have to pay for your policy from your household budget, however it does come out of your super. Accordingly, you need to carefully consider your personal circumstances and decide whether this option is right for you.

Insurance can give you peace of mind as you near retirement. If you need to claim, your regular super payments may be covered too so you’d be boosting your retirement savings even if you’re out of action.

The key is to make sure your insurance always meets your current needs―that way, the cost of your policy can reduce if your needs become less.

Explore your options with our insurance calculator available at www.amp.com.au/calculators. And if you’re 50 or older, make it a priority to speak with a financial adviser about your insurance needs today.

1 The own-occupation option is no longer available on new total and permanent disablement policies held in superannuation.

What you need to know

Any advice on this page is general in nature and is provided by AMP Life Limited ABN 84 079 300 379 (AMP Life). The advice does not take into account your personal objectives, financial situation or needs. Therefore, before acting on this advice, you should consider the appropriateness of this advice having regard to those matters and consider the Product Disclosure Statement before making a decision about the product. AMP Life is part of the AMP group and can be contacted on 131 267. If you decide to purchase or vary a financial product, AMP Life and/or other companies within the AMP group will receive fees and other benefits, which will be a dollar amount or a percentage of either the premium you pay or the value of your investments. You can ask us for more details.