When to review my insurance cover

22 June 2023

Mother, father and their two children stand outside their home, smiling.

Life insurance is not a "set-and-forget” insurance product; it requires regular review. Why? Well, your life is constantly evolving, and it's crucial to ensure that your insurance keeps up with these changes.

To assist you in this process, we'll highlight some of the typical milestones and times when you should consider reviewing your life insurance.

1. Important life moments

Marriage or divorce: When you get married or divorced, your financial responsibilities and beneficiaries may change. Reviewing your life insurance ensures that your cover adequately protects your family and any dependents.

Starting a family: The addition of a child to your family is a special time. It’s also an ideal time to review your life insurance cover to ensure that your policy provides sufficient funds to support your child's upbringing, education, and other needs.

Change in employment or income: If you experience a significant change in your employment status, such as a new job, promotion, or career transition, it's important to assess your life insurance cover. An increase in income may require an adjustment to your policy to maintain an appropriate level of protection for your loved ones.

2. Changes in your financial obligations

Life insurance should be able to cover your financial obligations adequately. Therefore, it's important to review your policy when you experience significant changes in your financial responsibilities, such as:

Home ownership: If you've recently purchased a new home or refinanced your mortgage, your life insurance cover should account for the outstanding balance of your mortgage. This ensures that your loved ones won't face the burden of repaying the loan if something were to happen to you.

Debt accumulation: Taking on significant debt, such as personal loans, credit card debt, or business loans, can impact the financial well-being of your dependents in your absence. Reviewing your life insurance ensures that your policy covers these liabilities adequately.

Education expenses: If you or your children are pursuing higher education, you may want to evaluate your life insurance cover to include funds for tuition fees and other related expenses. Likewise, should you wish for your children to obtain a private school education, you should consider the impact your death or disability would have on these aspirations.

3. Changing super fund

When you start a new job, you’ll usually supply details of your existing super fund to your new employer. If your insurance cover is connected to your super, it’s important to check that your insurance aligns with your new job and income, as these may change your risk category or income replacement needs. If your policy was previously linked to a group insurance policy, it’s also worth confirming whether your insurance cover can continue when you change jobs. Some funds may stop providing insurance cover when you leave your job, others may have a continuation option feature you can apply for to stay covered under an individual policy.

4. Changing health conditions

Your health plays a crucial role in determining life insurance premiums and eligibility. Therefore, it is advisable to review your policy in the following situations:

Declining health: If you have experienced a decline in your health since obtaining your life insurance policy, it's important to assess whether your cover is still sufficient.

Positive lifestyle changes: On the other hand, if you have made significant positive lifestyle changes, such as quitting smoking, losing weight, or improving your overall health, you may be eligible for lower premiums. Reviewing your policy can help you take advantage of potential savings.

If you are an MLC Life Insurance policy holder, then you have access to Vivo at no additional cost. Vivo is our health, wellness and recovery programs that can provide you with tools and support to help you improve your health and wellbeing today. Find out more at Vivowellbeing.com.au.

5. Policy performance and market conditions

Periodically reviewing your life insurance policy allows you to evaluate its performance and consider any necessary adjustments based on market conditions, such as:

Policy maturity: If you have a policy with an investment component, such as whole life or universal life insurance, it's important to assess its performance. Reviewing the policy can help determine whether it's meeting your financial goals or if modifications are required.

Inflation: Market inflation and cost of living increases are good indicators to check whether your cover is adequate to keep in step with the cost of living. You can read more about inflation proofing in this article.

Even if your life circumstances haven’t changed for some years, it can still be a good idea to check that your existing policy fits your current needs. Whether this means increasing your cover to account for personal or business debt, the impact of inflation, or changing your beneficiaries to include a new child, the goal is to have your life insurance in step with your life.

To check that your life insurance policy continues to be appropriate for you, please speak with your financial adviser. Together, you can review your policies in line with your current circumstances and implement changes as needed.


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