02 March 2020

With the right advice, there shouldn’t be any need to cut corners or sacrifice the adequacy of your cover to make your insurance policy more affordable. Because, at the end of the day, what’s the point of having insurance if it won’t cover you in the event of a claim?

Here’s three ways working with a qualified financial adviser can help make insurance cover more affordable – and manageable – for you and your circumstances.

1. Choosing the right payment structure

When choosing a payment structure, you need to consider the purpose of the cover and how long you are likely to maintain the same level of cover.

Stepped premiums are rated on the age you are on each policy anniversary, meaning the premiums will increase with your age. They are often considered as a great way to save money on cover that has short term needs and is rated on the age you are on each policy anniversary. For example, choosing stepped premiums in the first few years of your life insurance policy may help keep the cost of cover low in the beginning as a big component of the sum insured may encompass paying down or clearing debt, so that need typically reduces as the debt is paid down.

Level premiums, while more expensive in the beginning, can save you significantly over the duration of the policy. This is particularly true if you intend to hold the same level of cover for a long time as these premiums are based on your age when you first take out the premium. A level premium may be more appropriate for Trauma Insurance given you may hold this for 15 to 20 years.

2. Using Your Superannuation Fund to pay your premiums

Taking out life insurance through your superannuation fund may lower the cost of your insurance because premiums can be paid using concessionally taxed contributions to your super. There is also the option to link cover to your super fund to keep out of pocket costs down.

But keep in mind that any premiums coming out of your super fund may affect your long-term retirement savings.

3. Choosing a longer waiting period

Some personal insurance products, like income protection insurance, let you choose a waiting period. The longer the waiting period and shorter the benefit period, the cheaper your premiums are.

Income protection premiums paid outside of superannuation are also generally tax deductible to you personally which can help make the policy more affordable.

To discuss your insurance needs in more detail, contact the Findex Risk Insurance team today.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the thought or position of Findex Advice Services Pty Ltd AFSL 243253.