Page 89 - Smart Money

Smart Money

Mistakes to avoid with insurance

You must shop around. There are well over 25 insurers in Australia that
can issue life insurance products, and different insurers target different
markets at different times in different demographics. Insurance risk
levels are based around the risk of a particular occupation. White collar
workers who work behind a desk have a different risk level to someone
who works in the mines on heavy equipment.

Different insurers target different demographics and occupational
categories, so it is handy to know which insurers are more aggressive or
better value in those areas. And they all have different small print within
their contracts. Some insurers will issue a contract that won’t cover a blue
collar worker for a period greater than five years, and other providers
will. It is very important to get the best outcome or the insurance
provider most likely to give you the best outcome.

Insurers also review their costs periodically, not every year, but they
review their cost of insurance and their premium rates. In the last few
years, a lot of insurers have reviewed their costs and, unfortunately, they
very rarely review them down. So insurance premiums, even for existing
policy holders, have gone up over the last few years.
While it is great to get the right cover and have the right policy on day
one, you still need to review it. It might no longer be the best value two
years or five years down the track. It’s the same with your mortgage and
anything with varying numbers.

Key Point

The best time to take out an insurance cover or policy is when you have
no need for one. It is when you are in your 20s or 30s and you don’t have
the beer gut, you don’t have the stress levels of 20 years of work, you
don’t have all the other things that happen to men and women in their

mid to late 40s. It is when you are ideally fitter and healthier and the
insurers are willing to take you on as a client.