Your insurance policy needs to be dynamic - not set and forget

MI TaxReturn-467It is often decades after we purchase an insurance policy before we come to make a claim. The insurance policy’s terms and conditions may have remained static but your personal situation may have changed, resulting in the insurance company declining your claim. This results in premiums having been wasted and, in some instances, financial ruin for the policy holder.

A recent Strategi Institute document outlines just how easy it is to have a policy that may possibly not meet your needs and why it is important to keep your insurance company and adviser informed of any changes to your circumstances. Here are just a few of the scenarios from Strategi Institute:​​​​​​​
 
  • Being a smoker significantly increases life insurance premiums. We met a new client who had given up smoking nine years earlier and was paying premiums $850 per annum more than he needed to now he was a non-smoker. Our message: tell us if you give up smoking. We may be able to save you money.
  • A female professional had income protection insurance with annual premiums of $2900 per annum. She gave up work four years ago to have children and has not returned to the workforce, is not generating any taxable income and had continued to pay the insurance premiums. Our message: tell us if you stop working and are not returning to the workforce. There are different insurance policies that will better meet your needs that have a lower premium.
  • A Christchurch resident had car insurance and stated the car is garaged nightly. After the earthquake, the car owner moved to Auckland. Nine months later the car was burgled and badly damaged whilst parked on the street outside the new home. The car owner had not informed the insurance company of the change of address or less secure parking arrangement for the car. As a result, the claim was not paid. Our message: inform the insurer of any change in address.
Contact us for more details on these and other situations where your insurance may not be doing what you are paying for it to do. Our message: Constantly review all your insurances. We can give you a checklist to help you identify what changes to your circumstances may trigger a requirement to inform your insurer.