Maximise Opportunities from Personal Events to further protect whats important to you
On our shared journey through life we all experience common trials, challenges and other things life insurance companies may define as Personal Events. Generally these Personal Events include:
- you or your spouse adopt or give birth;
- you get married or divorced;
- you complete an undergraduate degree at a government recognised institution;
- you take out or increase a mortgage to buy or improve your home.
Increases without medical evidence are available inside most Life insurance companies through their plus range of contracts. Through Personal Events, you may be able to increase your sum insured, without any underwriting by up to 25% (of your original insured benefit) or a maximum of $200,000.
Why is this “Personal Events” Benefit important?
The ability to increase a policy without needing to again be medically underwrittenis an important feature, especially where your health may have deteriorated since 1st commencing the policy. … such is the beauty of life that as we age, changes do occur in our bodies. Increasing the policy usually only involves certified evidence of the personal event with a signed declaration. With minimal involvement required by you and your adviser, the increase is processed efficently.
Surprisingly, many people overlook the ability to increase the benefit amount of a policy without further medical evidence being required. Remember, a change in individual circumstances such as mortgage and children add a greater financial responsibility than that which may have been considered for the initial purpose of the policy.
Most life companies offer the same base conditions (birth, marriage) which are designed to be attractive to the 25-39 age groups … many are now offering Personal Event benefits attractive to those in the early 40′s including attaining further University degrees (eg Masters) and changes in employment/salary.
Divorce is now treated as a personal event by many life companies, as this event often leads to a new mortgage and possibly a new family, whilst still remaining financially responsible for the children of the first marriage.
An illustrative Case Study
Lisa commenced her life, TPD and Trauma cover 5 years ago when she was first married, taking a joint policy with her husband Steve. In December 2008, Lisa gave birth to her daughter; however during the pregnancy she experienced typical symptoms of back pain, gestational diabetes and weight gain. From an underwriters perspective these new conditions would greatly influence the outcome of her cover should she apply for an increase (likelihood of exclusions and increased premium loadings).
Fortunately, in her discussions with her adviser during the annual review of Steve and Lisa’s financial plan, Lisa became aware that her level of cover could be increased without medical evidence following the birth of her child. Her adviser facilitated an increase of $200,000 at standard conditions without underwriting being required.
Tips and Traps
- Generally, must be under age 55 to take advtange of increase without medical evidence from a personal event;
- Generally, only one increase per year is permitted;
- Your premiums will increase in line with the increased benefits requested
- Check the terms of notification of the Personal Event with the information specific to your policy … different life companies are different in their requirments.
Take away point
Specifics of an insurance policy likely wouldn’t be in your thoughts while experiencing the personal events highlighted .. I’m sure you would be busy concentrating on other new and important responsibilities … but this often neglected opportunity is also important … start a BBQ conversation to raise awareness of the opportunities that exist for most of us during our journey through life … I’m sure it’s something different that hasn’t been spoken about before … and may well not last as a conversation for very long, … but think of it as another way you could make a difference and truly help your friends and family.