9 December Is It Time To Review Your Insurance? December 9, 2020By ICI Administrator Aspire 0 By Fran Hughes is a Certified Financial Planner and Head of Financial Solutions at Nexia Perth www.nexia.com.au The current health crisis has put on a spotlight on the need for life and disability insurance. But with household budgets under pressure from the economic fallout, Australians are balancing the need versus affordability. The Financial Services Council (FSC) reported a surge over the last six months in the number and duration of claims for individual income protection insurance (IP), especially with mental health from effects of the COVID-19 pandemic, which in turn has resulted in increased premiums for all policy holders. Perhaps you hold a life insurance policy within your superannuation account and wonder is it time to review the level of cover? Here are 5 reasons why you should. Appropriate cover Recent statistics from the Rice Warner ‘Underinsurance in Australia’ suggests that less than half (42%) of Australians have enough life cover to provide the same standard of living for their families if they were to pass away. For most, life and disability insurance are held within superannuation accounts, with automatic cover set by the fund. So how much is enough? Most insurance companies say a reasonable amount for life and total disability cover is six to ten times the amount of annual salary, plus any debt to pay off including the balance of your home mortgage. Income protection is set at a maximum of 75 per cent of your annual salary. However, there may be variables that are unique to your personal financial situation. The Australian Government has a useful tool on its website www.moneysmart.gov.au that may help to calculate your insurance needs. Retention incentives Although insurance premiums have surged by a whopping 20 percent over the last 12 months, insurance companies have in place incentives to retain your business. When your next insurance renewal arrives, ask the insurer about their retention discount. Every little saving goes a long way. Existing benefits During the pandemic, the FSC announced an initiative by life insurance companies that would see existing policy holders retain their full total disability (TPD) definition even if they were stood down or working hours reduced. This is a significant benefit to hang onto considering the current uncertain environment. Of recent years, insurers have added a wellbeing hub to their service offering, with a wide range of resources to help you focus on your health whilst being rewarded just for holding an insurance policy. Through health checks and a points system, you may receive shopping gift cards or membership discounts for your efforts. All this adds up to reducing the cost of premiums, whilst maintaining a healthy lifestyle. Shop around At last count, there were 28 life companies in Australia and over 500 superannuation funds offering life and disability insurance. There is no shortage of options to shop from to find the right insurance cover to meet your budget. A recent insurer to the Australian market, PPS Mutual, goes one step further to specialize in specific professions such as Engineers, Surveyors, Architects, Town Planners. By doing so, this allows them to tailor the cover and pass on discounts to the overall premium. Superannuation options If the household budget is tight, superannuation is an alternative option to fund insurance premiums. Millions of Australians already have their life and disability cover through superannuation which pays a lump sum if you die or become permanently disabled. Seeking the advice of a financial planner to work through the appropriate cover versus affordability and retirement savings, goes far to ensure that you strike the right balance. Related Posts I Simply Don’t Have The Time Or Energy To Exercise Now is a great time to start getting moving more. As we progress into the warmer months, and longer daytime lets take advantage of our great country. Over this edition and next month’s edition we are going to give you short sharp ways to get active leading into Summer. 8 Tips To Start 2021 With The Right Intent 2020 is a year that we will never forget. It has challenged us to grow, evolve and become more resilient. As we arrive on a well-deserved Christmas and New Year’s holiday, it is an opportune time to reflect and prepare to launch into 2021 feeling fresh, recharged, and with the passion to lead with purpose. Getting Performance Reviews right New Year equals review time. 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Bite sized live civil industry updates you can consume in 20 minutes – without leaving your desk. 5 Reasons To Check What Your Superannuation Is Up To Superannuation - every working Australian has an account but not all understand it. With the government’s recent scheme of early access to superannuation, activity within super accounts have been at all-time high, with 2.6 million Australians withdrawing funds. Comment (0) Comments are closed.