Insurance might not always be top of mind, but it’s important to review your policies regularly to make sure you’ve got the right cover
Whatever your mix of cover — life, total and permanent disability, income protection and trauma — insurance can be an important part of protecting yourself and your family, now and into the future.
Thanks to the ability to pay for insurance through super, an estimated 94 per cent of working Australians have some level of life cover1. So it’s a good idea to review your insurance regularly to make sure you have the right type of cover—and enough of it.
You probably don’t think about your insurance regularly, but there are certain times when you should consider updating your policies to make sure they still reflect your lifestyle and insurance needs.
When and why you should review your insurance
Insurance works best when you have the right level of protection for your situation and as your life changes, so might your insurance needs. You should consider reviewing your cover whenever your situation changes, like:
- taking on a mortgage to buy a property
- having children
- getting married
- upsizing or downsizing your home
- getting a pay rise or take a pay cut
- starting a business
- experiencing a change in your health or lifestyle
- paying off your mortgage
- stopping supporting financially dependent children
- joining a new super fund that may provide automatic insurance cover
These milestones mark important times to review your insurance, including the amount of cover you have and whether your beneficiaries (those who will receive your insurance in the event of your death) are up to date.
How to review your insurance
Insurance is flexible and can be changed to align to your needs. Below is a step-by-step guide to reviewing what you have.
Step 1: Read your insurance contract
Refer to your product disclosure statement (PDS) and read it to fully understand what you’re covered for (death, disability or injury for instance) and compare this against what you’d ideally like to be covered for.
Step 2: Check the insurance policy expiry date
Check if your insurance policy has an expiry date, and if so, make note of when it is so you’re not caught off guard. It can be a good idea to set yourself a reminder a month or two before it’s due so you can contact your insurance provider ahead of time.
Step 3: Know your beneficiaries
An insurance beneficiary is the person, or people, who will receive your insurance payout in the event of your death. It’s important to make sure your beneficiaries are up to date so your money ends up in the right hands.
Step 4: Check if you have enough insurance
To help you work out the right level of insurance cover consider the following questions.
- How much money would your family have if you were to pass away or become disabled? Consider the amount of money you have in super, savings, shares and other assets, and existing insurance policies as a starting point.
- How much money would your family need if you were to pass away or become disabled? Consider the size of your mortgage and any other debts you have, as well as other costs such as childcare, education and day-to-day expenses you may be covering.
The difference between these figures should provide some guidance on the amount of insurance cover you may want to have. However, you might need to compromise between what you’d like and can afford. Our AMP Insurance needs calculator can help you crunch the numbers, and you can always ask an expert for further insurance advice.
Step 5: See if you have any other insurance policies
Like many Australians, you may have insurance through super. So, it’s a good idea to check this against other policies you might have outside super.
Then compare your cover, check whether you have any insurance double ups – if you have more than one super account with the same type of insurance, you may be paying for more insurance than you need.
Something to note on your TSC insurance, you’ll most likely only be able to claim up to 75% of your pre-disability income, regardless of whether you have TSC cover within multiple super accounts.
Step 6: Compare insurance providers
If you’re not sure whether you’re getting the best deal, you might want to compare providers. Remember, there are other considerations to take into account aside from reduced premiums, such as what level of cover you get, any exclusions (like the treatment of pre-existing medical conditions) and waiting periods.
Also keep in mind if you do cancel your insurance, you might lose access to features and benefits, and you might not be able to sign back up at the same rate or with the same level of ease.
It’s also important to disclose your situation to your insurer honestly, or the policy might be invalid if you do need to make a claim.
Step 7: Reduce or manage your insurance premiums
If affordability is a major concern, speak to your super provider or insurer depending on what type of insurance you hold, to find out how you can manage your premiums without losing your policy. You might be able to:
- reduce the amount you’re insured for
- change how often you make a payment (If you don’t hold insurance inside super)
- adjust your waiting and benefit periods.
Changing your insurance policy can be complicated, so it could help to speak to your financial adviser or call AMP on 131 267.
1 Rice Warner,Life insurance adequacy, paragraph 8.
Products in the Super Directions Fund and the Wealth Personal Superannuation and Pension Fund are issued by N.M. Superannuation Proprietary Limited (N.M. Super) ABN 31 008 428 322 (trustee), which is part of the AMP group (AMP). Before deciding what’s right for you, it’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions available from AMP at amp.com.au or by calling 131 267. Read AMP’s 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.
Products in the AMP Eligible Rollover Fund, National Mutual Retirement Fund, and NM Pro Super Fund are issued by Equity Trustees Superannuation Limited ABN 50 055 641 757 (trustee). Risk products are issued by AMP Life Limited ABN 84 079 300 379 (AMP Life), which is part of the Resolution Life group. AMP Life has proudly served customers in Australia since 1849. AMP Limited ABN 49 079 354 519 has sold AMP Life to the Resolution Life group whilst retaining a minority economic interest. AMP Limited has no day-to-day involvement in the management of AMP Life whose products and services are not affiliated with or guaranteed by AMP Limited. AMP Limited is not liable for products issued by AMP Life or any statements or representations made in the PDS for those products. “AMP”, “AMP Life” and any other AMP trademarks are used by AMP Life under licence from AMP Limited. Before deciding what’s right for you, it’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions available from AMP Life at amp.com.au or by calling 133 731. Read AMP Life’s Financial Services Guide for information about our services, including the fees and other benefits that AMP Life and/or other companies within the Resolution Life group may receive in relation to products and services provided to you.
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