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 cover slip and restart, 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.

Insurance claims by age  
Under 30 years 2%
30 to 39 years
40 to 49 years 19%
50 to 59 years 31%
60 years+ 41%

Source: Retail claims 2015, AMP Life Limited. 

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, it means you're no longer covered. 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. This applies to insurance you may have inside or outside of super.

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.

It pays to stay protected

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

As dependents leave home and your debt levels reduce, you should probably reconsider the level of cover you need and have. The key is ot make sure your insurance always meets your current needs. You could even save on the cost of your policy if your needs change and you don't require the same amount of cover.

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 and proceeds may be subject to tax. 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.

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

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© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.