Page 90 - Smart Money

Chapter 4

If you take out cover at that point, there are options for level premiums,
which means the premiums won’t rise as you get older. If you approach
the same insurer at 45 as opposed to 25, the 25-year-old is going to
get a significantly lower premium, but also, their premium won’t rise as
significantly over time.

A common mistake is insuring the wrong thing. We can over-insure and
under-insure. If we have four different types of cover, that means that we
aim to cover all possible scenarios. But if we insure to the fullest extent
in every circumstance, it can cost a lot of money. We try to work out a
portfolio of insurances that will cover all of the worst case scenarios from
a financial perspective within the client’s cash flow and servicing abilities.
And we try to place the ownership of the premiums or the policies so
that they have the most beneficial impact from a tax perspective. Certain
premiums are tax deductable, and we can also have your superannuation
potentially pay for some premiums.
You must give insurance the proper consideration. Don’t fall into the
trap of thinking that you have it covered because it is in your super. It may
be in your super, and your employer may have the cover, but it is still in
your best interests to consider these things and make sure that you have
the appropriate cover; even if it is in your super, it should be appropriate
and the right level and the right type of cover. It is a serious topic and it
is something that requires a little more attention.

The biggest mistake you can make is taking insurance for
granted and not shopping around.

Using a professional is the equivalent of using a mortgage broker. It
gives you access to someone who has the experience and knowledge of
the various providers, and knows who can source the best coverage for
the best value and the best premium price. Every insurance contract is
different; every insurance offering is different, so knowing which insurer
has the best definitions for certain issues and conditions that may be
applicable is valuable information.

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