How special events increases protect your future insurability
We all know the only constant is change. However, come claim time you need to be reassured that your cover will be sufficient for your current circumstances. It isn’t practical to set up your original cover for future events – such as getting enough cover for three children when you only have two, or two mortgages when you only have one. This is where the special events increase comes into play. Most life insurance policies have a built-in ‘special events’ increase which means you can increase your existing cover, without further medical underwriting. The specifics can change between providers, but they generally include;
Marriage or civil union
Divorce or legal separation
Becoming a full-time carer for a dependent relative
Birth or adoption of a child
Taking out or increasing a mortgage
Purchasing a residential property or residential investment property, vacation home or bare residential land
A dependent child starting full-time tertiary study
An increase in annual salary
The death or terminal illness of a spouse, de facto partner or civil union partner
The timeframe in which you need to apply for the increase varies between insurers, and the increase available is different for each event. It is important to speak with your adviser about your plans for the future as well as your life stage right now, and touch base with them anytime your situation changes. Some providers also give you the opportunity to increase your cover on certain policy anniversaries or allow you to purchase a future insurability option, which allows further increases to cover each year without further assessment (up to certain limits).
How this can help if your circumstances change
The key element of these increases is that they are available without further medical underwriting. This means that should your health change you are still eligible for an increase to your cover (provided you have not been diagnosed as terminal, which is defined as 12 months). We recently had a client who got life and trauma cover with us. There is a standard three month stand down for cancer on new policies, and unfortunately, she was diagnosed with an aggressive form of cancer within five weeks. We worked with her to get the pay-out covered but were unsuccessful. At that time, she hadn’t been diagnosed as being terminal, but with the aggressive cancer that she had, it was likely. We advised her to take out a $100,000 loan, and increase her life cover by $100,000 as a special events increase on the loan. This gave them money to live on, and when she tragically lost her cancer battle her husband was able to repay the loan with the extra cover on her policy.
The advantage of working with an adviser
how special events increase protect future insurability
If you had your insurance from a bank you would get a yes or no answer – the bank wouldn’t tell you any workarounds. The huge benefit of working with an adviser is that they are working for you and know the policies inside and out and know how they can help you make the policy work for you. Just because your health has changed doesn’t mean it is all over in terms of increasing your life or trauma insurance. There may still be ways that your adviser can help you get the most out of your policies, and is always best to bring them into the loop as soon as possible so they can work with you effectively. Want to discuss your future insurability or talk about a special events increase? Contact one of our friendly and knowledgeable advisers.