Living with a policy · Ring III
Reviewing cover as life changes
Moneysmart’s guides suggest looking at your cover again when life changes: a marriage or new partner, a baby, a separation, a serious illness, the death of a partner, or a change of super fund. For a policy you own directly, each anniversary is a natural moment too, because under the Life Insurance Code of Practice the insurer sends the policy owner a written notice beforehand setting out what you are insured for and explaining any premium increase.
General information, not advice. Whether your cover still fits is a question about your own circumstances, which a licensed financial adviser can answer. Moneysmart’s guides to insurance through super and life cover explain the general picture.
The notice before each anniversary
For an individual policy, the Code lists what that yearly notice in writing covers.
Before each policy anniversary: Code clause 3.10
- What, and how much, you are insured for.
- An explanation of any increase in your premiums.
- How premiums could change in future, depending on how they are structured.
- How to claim.
- The risks of cancelling and replacing your policy.
- How to contact the insurer if you want to change the policy or are having trouble paying.
If the most you could claim depends on what you earn at the time of a claim, the insurer also reminds you of that at least once a year. These yearly notices do not apply to group policies, such as cover through super or an employer, where the fund or employer may give you details instead. For new policies whose benefit depends on earnings and rises each year in line with inflation, the Code says the insurer will tell you that you can opt out of those increases.
Premiums themselves are not guaranteed, and Moneysmart notes they may change each year whichever way you pay for cover. The notice is where you see that change explained.
The moments to look again
Each of these comes from one of Moneysmart’s life-event guides. They are prompts, not a list of things everyone must do.
Marrying or formalising a relationship
Review the beneficiary nomination on your super account so it reflects your wishes, and check whether your life insurance should now include your partner. Getting married can revoke an existing will, which matters if your super nomination points to your estate.
A new baby
As a family grows, insurance needs may change. Moneysmart suggests reviewing life insurance, income protection and insurance through super, and checking whether your current cover would help with rent or mortgage payments, bills and childcare if you could not work. It also suggests checking that your nominated beneficiaries are up to date.
Separating
You may need to separate insurance policies. Moneysmart’s checklist includes updating insurance policies, checking super beneficiary nominations, and reviewing any beneficiaries listed on insurance policies and financial accounts.
A serious illness
Moneysmart suggests checking any policies you hold, and points out that you may have insurance through super that you weren’t aware of. Making a claim is covered in making a claim.
Losing a partner
When you feel ready, Moneysmart suggests reviewing your will, your super beneficiaries and your insurance policies.
Changing or combining super funds
Moving your super can mean losing the insurance that comes with the account, so Moneysmart suggests seeing what cover you have first and whether you can get similar cover in the new fund. When you change funds, you usually keep the existing insurance until the replacement policy is issued and the new cover confirmed. If you are over 60 or have a pre-existing medical condition, Moneysmart warns you may not be able to get the cover you want.
If the amount no longer fits
Moneysmart has a life insurance calculator, and for help deciding whether you need cover and how much, it suggests speaking to a financial adviser.
If premiums have become hard to pay, the Code says insurers will tell you about flexible options to help you keep cover, such as reducing the amount you are insured for. Those options, and what to know before cancelling or replacing a policy, are in cancelling, changing or replacing.