Reviewing Your Insurance
When you took out your insurance, if you received good advice (or did it yourself) the numbers were probably right. However, a few years later, I guarantee that they won’t be right anymore.
Life changes constantly. As you age, the cost of insurance increases, but so should your overall wealth. In some cases your risks reduce, eg; as the mortgage reduces and your kids age. However, sometimes your risks increase. A significant pay rise, birth of a child or an increase in mortgage can be a reason to review your insurances. Likewise a health event, for you or someone close to you, can cause you to reassess your priorities. Trauma insurance in your 20s might seem a waste of money, until you know someone who has had cancer young.
A change in your ability to carry risk is also a trigger to review your insurances. When you bought your first house, you might have only taken out a minimum of life insurance, as you were both working. The birth of a child or a change in income circumstances could be a reason to review.
At Excelins, all of my clients are offered a review every year. This is important, both for those people who have had “life events” that might require an increase in cover as well as for those who are getting on in years and are finding the annual premium increases a bit difficult to accept.
Reviews don’t have to wait until the annual anniversary. My clients are encouraged to contact me in the event of a significant change in their lives at any time. These can include:
- Birth of a child
- Change of job
- Increase or decrease in income
- Starting or selling a business
- Any medical event
- Buying or selling a house
To underpin the importance of reviews, here are three actual client stories, with names changed:
A few years ago I met a new client, let’s call him Bill. He’d had a major heart attack 4 years earlier. He hadn’t seen his broker in 8 years. A quick glance at his policy was enough. I said, “did you know you have cover for trauma?”
“Do, I? What’s that?”, he replied.
“Oh, cancer, stroke, heart attack”
I didn’t want to get his hopes up, as he was well outside the claim period, so I told him I’d see if could still get him something, even just a refund of premiums.
2 months later, Bill rang me.
“Guess what? They paid me!”
“Great”, I said, “How much?”
There was silence for a few seconds, then he said “All of it! $158,000.
Without having a review, that claim would not have happened. Of course, his broker should have reviewed his policy much earlier, but that’s another story.
Again, a client who hadn’t seen his broker for a number of years, except when he was being sold some more insurance. I was referred to him and reviewed all his covers. While we were talking he mentioned that he’d had radiation treatment the previous year. My ears picked up, as Doug also had a small Trauma policy.
I submitted a claim form to the insurer and within 2 days Doug received $27,000. Maybe not a huge sum, but Doug happened to be between jobs and the money certainly came in handy.
This one was more a lesson for me about reviews and happened early in my career. Sharon and her husband had one child and had medical insurance, with all three on the policy. I hadn’t seen them for two years and rang to catch up. When I arrived at their house, the first thing I noticed was a baby. They hadn’t thought to tell me that Sharon was pregnant.
With most medical insurance policies, newborns can be added to the policy within three months of birth without medical assessment. Missing this narrow window won’t affect most babies, but if a child has a genetic condition, after three months they are likely to have an exclusion under their medical policy. In this case I was just in time and it was a good lesson.