Article by Steve Marsten
Have you had a chance to review your Life Insurance recently? In the
words of an old rock commentator – do yourself a favour! As financial planners
with Professional Investment Services,
we see what’s happening in this space quicker than most people and at
the moment the increase in premiums is a big concern.
I understand everything tends to go up in price and with Life Insurance
this is particularly the case. The older we get, the more it costs to be
insured. Usually we have expected increases of some 5-8% with each year we get
older during our 40’s and 9-12% during our 50’s. Each birthday puts you one
year closer to your life expectancy and thus you become a higher probability to
cause a payout to the Insurer.
But in recent times we have noticed that some companies (well known and
in the industry more than 20 years) have suddenly put the prices up 20-30% and
some have put their prices up 10% and then added a further 10% 6 months later.
The reason is, apparently, they have been told by their actuarial advisers and
underwriters that they are short on funding as the general population ages, to
meet the potential major payouts in the medium term. Hence they quietly raised
the premium.
Now of course they must let you know and they do that by some form of
correspondence. My advice is – take the time to read it. I know many people
sign up for their life insurance and it becomes a set and forget approach.
Recently I have found clients who have life premiums built into their super so
they don’t realise that these huge increases are eating away a fair chunk of
their super and they can’t understand why their super isn’t growing fast
enough. Or it is simply a direct debit from their account and they have seen it
but assumed it hasn’t moved much.
These increases will discourage people taking up Life insurance, however
you should review your insurance and make sure it’s still relevant and of value
to you. Has the original purpose or objective changed?
At Sothertons PIS - we can review your insurances to make sure you are
not paying too much for them or making sure that the cover is still relevant
for your purposes. Call us for a free
review on 07 4972 1300.
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