Life insurance is often taken out at a major life stage, such as buying a home, starting a family or taking on a new financial commitment. But once the policy is in place, many Australians forget to review it. The issue is that life does not stay the same. Your income, family responsibilities, debts and financial priorities can change significantly over time.
Life Stages Can Change Your Protection Needs
In your younger years, your focus may be on protecting your income, managing personal debts or making sure a partner is not left with financial pressure. As you move into family life, the need for protection can increase. Children, childcare, school costs, mortgage repayments and household expenses can all create greater reliance on your income.
Later in life, your needs may reduce. Children may become financially independent, debts may be lower, and savings or superannuation may be stronger. At that point, the question may shift from “How much cover do I need?” to “Is my current cover still appropriate?”
Family Growth Often Changes the Picture
Starting or growing a family is one of the clearest reasons to review life insurance. A new child can increase the number of years your family may rely on your income. It may also create new priorities, such as education costs, home stability and the ability for a surviving partner to maintain a workable lifestyle.
Some insurance products include features that may allow cover to increase after certain life events, subject to policy terms. For example, ClearView notes that its Future Increase Benefit may allow cover increases when life changes because of certain personal or business events, without further medical information in specified circumstances.
Debt Changes Matter Too
A mortgage is often one of the biggest reasons people consider life insurance. If your loan increases due to buying a home, refinancing, upgrading, renovating or purchasing an investment property, may be a good time to review your existing cover.
On the other hand, if your mortgage has reduced, or if you have sold property or built savings, it may be worthwhile reviewing your existing cover and understanding how it aligns with your current financial circumstances.
Regular Reviews Help Keep Cover Relevant
Changes in personal circumstances, such as income, debts, family commitments, and financial goals, may affect how individuals view their insurance arrangements over time.
Reviewing your existing cover may help you better understand the benefits, costs, and features of your current policies, including any cover held inside or outside superannuation.
Understanding your current cover can assist you in making informed decisions about your insurance arrangements.
Final Thoughts
Life insurance should not be treated as a set-and-forget decision. As your family grows, debts change and responsibilities shift, it may be worthwhile reviewing your cover to better understand how your insurance arrangements have evolved over time.
Review Your Life Insurance with Flatmart
Flatmart can help you review your current life insurance position and better understand your existing cover, including the benefits, costs and features available to you. Request a life insurance review with Flatmart to understand what cover you currently have and whether any changes in your circumstances may be worth considering.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at Flatmart today.
General Advice Warning: The information provided in this article is of a general nature only and has been prepared without taking into account your individual objectives, financial situation, or needs. Before making any decisions, you should consider the appropriateness of the information and read the relevant Product Disclosure Statements (PDS).
Sources
- ClearView ClearChoice Combined PDS (13 May 2024) - Key features, Indexation Benefit and Future Increase Benefit, pp.5-6.
- AIA Priority Protection PDS (15 December 2024) - Risks of insurance and ongoing review importance, p.168.
