As we age, our life and disability insurance premiums increase due to the risks associated with getting older. This is especially true after age 50, particularly for Trauma and Income Protection cover, as we see an increasing diagnosis of various cancers and heart disease in this age bracket.
In some cases, it is possible to implement level premiums, which don’t increase with age. Level premium policies have higher premiums in earlier years, but protect you from much higher premiums later on. It might be worth considering a level premium policy if the cover is going to be needed for the longer term (say over 10 years as a guide).
With the claims payments for Income Protection and Trauma increasing substantially in recently years, largely due to increasing diagnosis of mental health problems and cancers in particular, all insurers have been reviewing and increasing premiums (over and above age increases) to meet the extra claims cost. This applies even to level premium policies. The Australian Prudential Regulatory Authority (APRA,) which oversees the industry, has very specific solvency and reserving requirements for insurers. With the recent rise in the number of insurance claims, APRA has demanded the money reserves set aside for future claims be increased and the primary way of doing this is to increase premiums.
What can we do to help you?
As part of our review process, we consider whether your existing insurance cover is still appropriate. Sometimes it is possible for you to decrease your level of cover as your assets grow, your debts reduce and/or your future liabilities decrease (e.g. children finish school and become financially independent).
If we think an alternative insurer can provide you with better or less expensive cover, we can provide you with comparative data. But please remember, switching insurers is not straight forward. Policy conditions are seldom exactly the same and your current health conditions will be assessed. This may cause underwriting problems if your health has changed since your existing policy commenced.
Ultimately if you need the cover to financially safeguard you and your family, the higher premium may just need to be paid. May of our clients (including our own principal – Bentley Klein) have been paid claims in recent years and not one of them thought “they didn’t need the claims money”. Life insurance is there to protect those you love and to ensure that in the case of unforeseen circumstances, financial worries are minimised or avoided altogether.
Axios Financial Solutions are a team of respected and highly regarded financial planners with offices on St Kilda Rd Melbourne. Axios helps their clients meet their desired outcomes by providing tailored financial services, strategies, advice and solutions. You can contact them at firstname.lastname@example.org or (03) 9869 5555.
Axios Financial Solutions Pty Ltd (ACN 007 299 014), is an Authorised Representative of Charter Financial Planning Ltd, Australian Financial Services Licensee 234665
Please note that the information in this article is of a general nature only and has not taken into consideration your individual circumstances. Should you wish to discuss your personal circumstances please call us on 03 9869 5555 or email email@example.com.
Level 3 The Metropolis
480 St Kilda Road
Melbourne Vic 3004