You may realise that your insurance premiums increase significantly as your age increases (stepped premium), the sum insured on your policy has CPI Indexation (where the sum insured increase each year) or your insurance provider has recently re-priced their policies – which we are seeing more often with all types of insurance policies, both for retail clients and group insurance (predominantly though employer superfunds and industry super funds).
If you feel that you can no longer afford or justify the cost of your insurance, there are other options other than cancelling your policy/ies altogether. Some of these are:
- Firstly consider looking at other insurance providers, to see if you are able to gain a more competitively priced policy (with hopefully similar or better features). If there are other providers worthwhile considering, get an Insurance pre-assessment done (to see if that new provider will offer you cover on the same or better terms before any changes are made to existing policies).
- If either due to cost, health or medical reasons, you are unable to look at other providers for your existing cover, it is important to understand what cover you have in place and the events that you are trying to insure against. This is then a perfect time to complete a full risk needs analysis, for you to determine what events you wish to insure against and potentially what events you would be comfortable self-insuring.
- There may be an option of moving some of your insurance cover to be owned under a superannuation environment whereby the premiums are paid for by your superannuation balance, however, please be warned that this may erode your retirement savings and you should seek professional advice in the first instance.
- For Income Protection you could consider any of the following:
- Lengthening the waiting period (i.e. changing the waiting period from 30 to 90 days)
- Shortening the Benefit Period (i.e. changing the benefit period from Age 65 to 5 years)
- Reducing the sum Insured
- Or a combination of some or all of the above
