Wading through the waffle to get to the important parts
I have a question to ask you.
Have you ever read an insurance product disclosure, or a PDS as they call it?
It’s a protocol that the insurance company sends you a PDS when you take out an insurance policy with them. And guess what – you’re expected to read it.
Why? Because if you ever need to make a claim, you need to know what you’re covered for.
The same goes with your policy document. You need to take some time to read through it all to make sure it’s what you discussed.
Now we know these documents can be super long-winded and packed full of jargon, so let’s break it down some insurance aspects you need to know.
Common aspects of life insurance: what to look out for
1. Wording:
With so much jargon in insurance policies, it can be tricky to understand some of the wording. There are so many different policies, and each one offers something different to the next. So, you need to be ready to read! Insurance companies will stick to every little word in their policy too – it’s a safeguard for them to ensure they only pay claims that are 100% covered under every clause.
2. Policies:
Policy refers to the type of insurance you’re taking out. For example, life cover, TPD, income protection, trauma and so on. Some insurance companies may be specialists in an area and write policies focused on certain individuals and offer great deals (i.e. small business owners). Other types of insurance may already be covered by your superannuation fund (such as the life or TPD) so always make sure you know what you’re covered for before taking out policies.
3. Underwriting:
Always make sure your policy is underwritten upfront before you pay a premium. This means you’ll know exactly what you’re covered for and the terms and conditions. There’s nothing worse than making a claim only to be told that it’s not covered as it wasn’t written into your policy. This is a common trap when you purchase life insurance online. Some types of insurance may require blood or medical tests before you can take out a policy, so make sure once this is done, that everything is written correctly in your policy and you’re covered for what you requested (without hidden clauses).
4. Duty of Disclosure:
No matter what type of policy you take out, you always have a duty of disclosure. You must always tell your insurer everything about your past health or current health record when they ask you. If you don’t tell the insurer and it’s revealed when you make a claim, your claim may be rejected, and your life insurance policy cancelled.
What you should never focus on when it comes to life insurance
There’s one thing that you should never factor in when you’re deciding on what life insurance policy to take out.
Price.
You should always look at what policy is right for you, rather than simply choosing the cheapest option available. It’s not that you can’t afford it, but rather that you can’t afford NOT to have it.
There are ways you can reduce the cost of life insurance premiums like income protection, by having a larger waiting or excess period. Make sure you talk to your insurer about your options.
Want some reading your life insurance policies before you sign up?
Before you sign up for any life insurance policy, make sure you understand all the words, check that everything is written as it should be and that there are no hidden clauses. If you want independent advice, we’re here to help.
Email us at: aaron@ekfinancialgroup.com.au
Or call us on 03 9020 1888.
