Life insurance has three purposes; funeral costs, repaying debt and looking after your dependants for a while. It is not designed to make your family rich. And let’s be honest; you’d rather not claim on it, right?

So, it is important to manage the cost. In your 20s, the cost of insurance hardly changes. In your 30s it increases a bit. Once you hit 45 though, the increases really start to bite.

However, it is not just the age-related premiums that are costing you money. Assuming that you initially got the right amount of cover, the only thing that remains constant is the cost of a funeral. Your mortgage should be coming down and your kids are getting older. Hopefully your overall wealth is also increasing. So why is your life insurance cover increasing, when it should be going down?

The answer is apathy, both on your part and that of your broker or bank. You get the renewal letter from the insurer and you just accept the increase as a cost of getting older. Do you sit down on a Saturday night and say; “there’s nothing on Netflix, let’s review our life insurance”? Yeah, nah.

Yet you regularly service your car. You’ll drive 10 kms to fill up with petrol to save 6c per litre. Some people change their power company regularly to save $100. If you want to save serious money, review your life cover level every year. It’s not hard.

Mark Lynch is a Financial Adviser. His Disclosure Statement is available free upon request. Any comments in this column are the opinion of the writer and should not be construed as financial advice.

The Cost of Apathy