Before you cancel your insurance, consider your options
By Peter Cassidy, Financial Adviser, Britannia Financial Planning Limited
As we get older, insurance premiums can increase – sometimes to the point where you start questioning whether the cover is still worth the cost.
For some people, the natural response is to cancel. But before you do, it’s worth talking to your adviser. Reducing your level of cover may be a suitable option, allowing you to lower the cost while keeping some valuable protection in place.
I recently had clients contact me because they wanted to cancel their Trauma Cover due to the cost. They had $150,000 of cover costing $257 a month, or around $59 a week.
We talked about what they could comfortably afford and they decided $25 a week was manageable. Rather than cancelling, we reduced their cover to just over $63,000.
As it turned out, one client’s medical condition later worsened and they made a successful claim.
Yes, if they had kept the original cover, the payout would have been higher. But if they had cancelled as they originally intended, they would have received nothing. The payout they did receive helped fund private treatment rather than potentially waiting months for treatment through the public system.
That’s why it’s worth looking at your options before making an irreversible decision.
It’s also important to understand what your existing cover can do. Trauma Cover, for example, doesn’t generally require you to be terminally ill or unable to work. It pays when you meet the claim criteria for one of the medical conditions covered by your policy.
I once met a woman who had undergone breast cancer treatment years earlier but had been told there was little point claiming because she wasn’t terminally ill. I contacted the insurer and lodged a retrospective claim. It was accepted and she received $270,000 – 10 years after the original medical event.
So whether you’re thinking about cancelling cover or wondering whether you may have a claim, talk to your adviser first rather than making assumptions.
Your insurance needs will usually change over time, and your cover may be able to change with them. You may consider options to make premiums more manageable while still leaving valuable protection in place.
And remember – it doesn’t always happen to someone else. 😊
The information contained in this publication is intended for general guidance and information only. It has not been personally prepared for you. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult with us before making any investment decision. Historical market performance may not be indicative of future market performance.