At a time when life feels less familiar than ever, it’s natural to seek ways to reduce uncertainty for ourselves and our loved ones. Life insurance is one way to do this. While many of us don’t think twice about insuring replaceable assets like our homes and cars, we’re a little less certain when it comes to our lives, income and health. Whether you’re new to life insurance, or keen to review the ‘fitness’ of your existing policy, here are some important points to consider:
What is life insurance?
A life insurance strategy (or portfolio) is designed to bridge a financial gap caused by an involuntary exit from the workforce due to medical diagnosis, injury, or death, from now through to retirement. A robust life insurance portfolio is a purpose-built one, with financial support tailored to your particular circumstances. A life insurance portfolio can consist of four products: Life (death), Total & Permanent Disability (TPD), Income Protection (salary continuance), and Trauma. In terms of funding certain life insurance premiums, there are options to do so through your superannuation, as a means to ease pressure on disposable income. Some life insurance products can also provide personal tax deductions.
How does it work?
Let’s take Income Protection as an example. Your ability to earn an income is your most important asset – something 2020 has reminded us about in spades. Living expenses continue even if your work does not. While Income Protection does not cover redundancy or termination, it does cover up to 75% of your income if you’re unable to work for a period of time due to injury or illness. Furthermore, personalising your Income Protection Insurance with an appropriate waiting period and benefit period means factors such as living expenses, financial objectives and salary are protected throughout a difficult time.
‘Set & forget’ = fraught with error
For Life Insurance in particular, a ‘set and forget’ approach to policy management is fraught with error. At Honan, our approach to Life Insurance (and indeed most insurance programs across the board), adheres to the following golden rules:
RULE 1: Review Regularly
When comparing life insurance strategies, consider a policy that’s tailored to your financial objectives and needs, with annual reviews to ensure ongoing appropriateness.
You want peace of mind that if something does happen, your insurance portfolio is truly ‘fit-for-purpose’ and ready to respond to your current personal circumstances (NOT your circumstances five years ago when the cover was implemented).
RULE 2: Bespoke is Best
Insurers have vastly different risk appetites imposed by reinsurers. At Honan, part of our policy-building process is to run a medical pre-assessment for all clients; matching their unique needs with a policy that fits. You may, for instance, require a medical loading to cover an existing condition, or a specific medical exclusion may apply due to previous injuries or illness. Designed with utmost confidentiality along the way, each policy will be built differently; reflecting your body mass index (BMI), smoking habits, pre-existing health conditions, and childhood/sporting surgeries. Again, these variables will change over time; thus the importance of Rule 1. Remember, previous medical history should NOT be a deterrent to seeking advice. The purpose of unpacking your personal history is not to discriminate, but to achieve a policy that is truly accurate and ‘ready to rescue’ in a time of need. At Honan, we assume the role of advisor – asking the right questions, answering yours, collating the data and achieving a policy prepared solely for your circumstances.
We’re with you all the way
Honan Life is a specialised Life Insurance division within the Honan Group. Having unparalleled access to the market allows us to implement the right cover for our clients, with premium competitiveness and favourable medical terms.
To find out how Honan Life can support you and your family, please reach out at any time for a complimentary review of your existing portfolio, or to discuss new options available.
Tyler Scarce – Personal Risk Advisor
0439 813 124