We’re all a little unsettled about COVID 19, at the moment. The following Q&A is representative of the many calls and emails we have received from clients concerned about Corona Virus. Here are a few of the answers to some of the most common questions-
1. Q: If someone dies from COVID-19 will their life insurance pay out? A: Unlike travel insurance there are still no blanket exclusions for life cover.
So, yes, your life insurance will still pay out.
2. Q: Can I apply for more insurance or replace my existing cover?
A: Yes. It’s a good idea to get advice on what kind of cover and how much you need.
3. Q: If I’m already suffering from COVID-19 can I get more cover. A: No. You won’t be able to apply for any further cover until you’re fully recovered.
4. Q: Can I get income protection if my company has already closed down?
A: No. You need to have your cover in place while you’re still working.
Basic Knowledge & Common pitfalls to avoid
TV is full of ads for life insurance and funeral cover. Those ads serve a good purpose by unsettling viewers and encouraging them to act. However, what these ads don't mention is the poor claims experience that awaits you. You or your loved-ones will be filling out forms or dealing with a faceless phone operators when you need that money. Then after paying all those premiums and all the hassle of proving everything, almost half of claims are denied or unsuccessful (see below article).
If you are really concerned about protecting your life or family, take the time to apply for insurance with an adviser attached. Talk to someone who is going to get all the information required up front. The same person will answer your call and guide you through the claims process.
Group Insurance=reducing cover
Do you have multiple super funds? That means that you probably have multiple insurance policies.
Unfortunately, the cover is probably "unitised" which means the premiums stay the same, but your level of cover goes down as you get older. You might have started off with $400,000 in cover, but by the time you reach 50 it may have reduced to less than $50,000.
After paying for cover all your working life don't be a loser when it comes time to claim. Make sure you have the level of cover you need when you need it.
Talk to an adviser and have your insurance tailored to your occupation and life-stage?
Group Insurance=No future guarantees
When you take out an insurance policy you expect that you'll get what you pay for. You expect that you'll be covered for everything you've paid for.
This is especially important for life insurance because your claim may be many years later.
However, the terms and conditions of group insurance policies can be changed at any time. The super fund can move the goalposts any time and this usually disadvantages existing policyholders.
Retail super insurance policies are governed by contract law. Policy conditions cannot be changed as long as you continue to pay your premiums.
but group cover conditions can be changed at the discretion of the Sunsuper's trustees changed the payout for Total & Permanent Disability cover from a single lump sum into a string of annual payments. This is an example of how changing the terms of cover can cause claimants severe pain and hardship.