We all know what a pain taking out or adjusting your insurances can be, especially Income Protection! Invasive health questions and a smattering of various tests can make the thought of increasing your cover something this is better tackled on another day… As an example, you set up your Income Protection with a sum insured of $15,000 per month and undergo the obligatory blood tests and health questions and your cover is accepted without any exclusions or loadings and put into force. A couple of years later, your income has increased and so you wish to increase your sum insured by $2,000 per month. Unfortunately, an insurer cannot underwrite you on the $2,000 increase but rather on the whole $17,000 per month total which means more blood tests, more health questions to get the extra cover. There are two shortfalls with this, even if you are happy enough to go through the requirements;
- It restarts your “Duty of Disclosure” requirements with an insurer. Effectively, the longer you hold a policy with an insurance company, the harder it is for them to refuse a claim.
- What if your health has changed? What if you have started suffering cervical spine pain and now the insurer wants to exclude that part of your spine from cover?
Most policies have the ability to increase your sum insured at certain times or immediately after certain events (marriage, birth of children etc) by a certain percentage without any underwriting. By avoiding underwriting, you avoid the two scenario’s I outlined above. Some policies are really flexible in the times and amounts that they will allow you to increase cover where some are quite restrictive.
If you would like to know the terms of your policy, get in touch with your adviser or feel free to contact me on email@example.com or 07 3382 6723.