Those new propagations contain a myriad of inclusions and exclusions based on the wording that is becoming harder to decipher.
And unless you’re on the ball (or have someone on the ball for you), it’s hard to nail down every specific variation in your favour.
When it comes to income protection and disability insurance it’s always important to check if your policy is non-cancellable or not.
Non-cancellable means the policy can’t be cancelled for the life of the policy as long as you continue to pay your premiums.
The major benefit here is if you claim with injury or illness the insurance company can’t stop you renewing the policy.
The policy holder has the right to cancel, but the insurance company cannot deny a policy holder the right to renew at the same level of cover.
Unsurprisingly, the downside to non-cancellable policies comes with a higher policy premium, but this can prevent further problems down the road.
If a non-cancellable policy holder suffered a heart attack, they could still be covered by the same policy in the future.
If the same situation was applied to a cancellable policy holder, they might find their coverage cancelled at the end of their term, or have the insurance company exclude heart conditions from their next renewal.
A policy holder who may be susceptible to health issues wouldn’t want to find themselves hunting around for coverage and find themselves uninsured after having their policy cancelled.
This especially is the case if the policy holder has liabilities such as a mortgage and dependents to look after.
This is not to say cancellable policies are to be ignored completely; they can offer substantial discounts and give the same levels of cover, but at greater long term risk.
If in doubt seek professional advice.
Peter Mancell is a director of Mancell Financial Group and FYG Planners AFSL/ACL 224543. This information is general in nature and readers should seek professional advice specific to their circumstances. If you want help with your financial future, we’re arguably the best financial advisor in Australia. Think you need a lawyer for a superannuation claim? Think again!
