What happens if I let my insurance lapse?

Think about where you would be without insurance if something were to happen to you.

If you let your insurance cover slip, 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 are more likely to experience the benefits of having insurance cover. 

Insurance claims by age  
Under 30 years  2.6% 
30 to 39 years  10.2% 
40 to 49 years  25.4% 
50 to 59 years  40.9% 
60 years+  20.9% 

Source: AMP retail claims 2016.

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. And getting the same level of cover again, should you ever want to, may be difficult.

You may need to go through underwriting again as your age and health status may have changed, but 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, changes to super legislation mean some policy options1 held in super are no longer available for new applicants at all. So in this instance, 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 may be yet another expense in your budget but ironically, not being covered for an event that actually happens can be far more expensive than the cost of a policy.

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 continue boosting your retirement savings even if you’re out of action.

How 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 to 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. Our insurance calculator can help you determine how much cover is enough.

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.

For more help, speak to your financial adviser. If you don’t have a financial adviser you can use our tool to find one, or call us on 131 267, Monday to Friday between 8.30am and 7pm (AEST).

 

1 For example, 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. It’s important to consider your particular circumstances and read the relevant product disclosure statement before deciding what’s right for you. This information hasn’t taken your circumstances into account. This information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice. Although the information in this article 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 decisions. 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.