Insurance is often thought of as something that you must have, to satisfy requirements and to achieve peace of mind. Peace of mind isn’t all that hard to achieve either, as the assumption is that if you have insurance you are covered. Right?
The answer is no. Critical mistakes are made every day when purchasing insurance, some meaning that you might as well not have had any to start with. Here are some guidelines to follow:
- Know exactly what product you are purchasing, and what its benefits are if you need to make a claim. Insurances ranges from Life Insurance to Landlord insurance, and it’s vital to understand firstly what type of insurance you need, and what it will cover.
- Purchasing without professional advice. There are many companies who flaunt how easy it is to be covered over the phone, but buyer beware. This type of cover often means that they perform the assessment at the time of claim, and not at the time, you apply. This means that it may be too late when you make the claim, to ensure that what you needed covered is included. This can be avoided by accessing cover with and adviser.
- Assuming your superannuation fund covers you. This is definitely not always the case. Generally, they have a component of insurance, but the terms can vary from age to unclear terms for payment. A good advisor will be able to assist you not only during the claims process, but also at the point of sale so you understand what your benefits are, and how they will be paid.
- Being sold on price. Insurance is in place to prevent a problem, and it can be difficult to fork out large amounts of money for something that you may or may not need in the future and this makes it easy to go with the cheaper option. It is very important however to consider the capacity of the insurer to pay your claim, what benefits they include (often the less you pay the less you are covered for), their policy definitions, exclusions or limits and overall communication and service. If you don’t get the correct advice, you may be receiving inferior cover that will cost you more in the long run, or have been a waste of money.
- Increasing premiums with age. Sure, as you get older the risk factors increase but this doesn’t mean you should let your protection package go without regular monitoring. An advisor will be able to help you select a package that might have a level premium, if this suits your situation.
- Reducing the cover, you actually need. This is probably the most common factor in buyer behaviour, and one of the riskier ones. Most people want to save money on premiums or monthly instalments and end up taking out only minimal cover, but this could lead to much bigger expenses down the track.
It is important to ask yourself critical questions, like “what situation would my family be in, if I wasn’t around to provide for them” and discuss your expectations of cover with your advisor. CAAA Commercial Concierge offer a risk assessment and planning service for insurance through a dedicated Wealth partner. Speak to your Concierge today about performing a health check on your insurances.
Financial Product Advice – Disclaimer
To the extent applicable the above general information we have provided you is purely factual in nature and does not take account of your personal objectives, situation or needs. The information is objectively ascertainable and, therefore, does not constitute financial product advice. Similarly, any tax, superannuation or self-managed superannuation fund advice we have provided is factual and not financial product advice as defined by the Corporations Act. It should be noted that taxation is only one of the matters that you need to consider when making a decision on a financial product. If you require personal or financial product advice you should consult an appropriately licensed or authorised financial advisor. Commercial Associates Accountants and Advisors Pty Ltd A.C.N 117 062 183 and its subsidiaries are not licensed to provide financial product advice.