All of a sudden your financial responsibilities are much bigger. And that should be reflected in your life insurance – to make sure it covers everything you need it to.
A common misconception about life insurance is that it’s a ‘set and forget’ arrangement that doesn’t need to be reviewed regularly. The problem with that approach is that life inevitably changes.
Say you bought life insurance when you got engaged or married, as many people do. You probably bought it to protect the lifestyle you enjoy with your partner. So what happens if kids come along? Or you move to a bigger house with a bigger mortgage? Or you start your own business?
The ‘future insurability’ feature of most life insurance policies gives you the ability to increase your level of cover without having to provide any medical evidence. If you’ve taken out a OnePath policy through an adviser #, you are able to do this every three years, or every 12 months if a major life event occurs such as:
- Marriage or divorce
- Becoming a parent or carer
- Increasing your mortgage
- A salary increase of 15% or more
- An increase in the value of your business.
Policies with different insurers may differ, but with most policies insured with OnePath you can increase your cover without medical evidence by up to 25% of the original amount insured, or $200,000 (whichever is less), for each major life event,also known as a ‘trigger event’ (eg. marriage, divorce, retirement etc).
So if you started with $500,000 of cover, you could potentially increase your cover by up to $125,000 per trigger event– simply by filling out one short application form and providing proof of the trigger event (e.g.marriage certificate).
Over time you can potentially use this feature to double the amount of your original sum insured, capped at $1 million overall.
Your financial adviser can help you work out how much extra cover you need and generate a quote for you on the spot. If your increase is bigger than what’s allowed through the future insurability feature, you may need to do some medical checks.
Just as your cover needs can increase as your life changes, they can decrease as well – e.g. as you pay down your debts or your children get older and become financially independent. That could mean you’re paying for cover you don’t need.