Exclusions and policy terms, another good reason to regularly review your insurance coverage

An unfortunate fact of life is; time marches on and we all get that little bit older. This also means the policy you took last year, five years or ten years ago may not be quite as appropriate now as it was at the time you first took it.

This does not mean it is a bad policy; it is just that it does not meet you needs any more. However, there are some terrible policies out there too but weather yours is one of them I could not comment without looking at it.

These points were highlighted again this week with a few of our new clients I have spoken to.

Suicide

There is a common misconception that suicide is not covered by life cover policies. This is generally true for the first 13 months of a policy. If you are working with a specialist life insurance adviser then the suicide exclusion on your new policy would only have this excluded for the first 13 months. After that suicide is covered, qualified by there’s no reason for the insurance company to have applied a wider suicide exclusion. In addition, if you have had life cover previously and you transfer your cover, then this 13-month exclusion is often waived. If you bought your policy from somewhere other than a specialist life insurance adviser, then the policy you have may have a permanent suicide exclusion so check what your policy actually says.

Travel

Another situation, let us say you took a policy out when you bought your first home and were starting a family. If you were not a regular traveller then overseas travel was probably something to look forward to in the future but not a key concern back then. Now you have moved a couple of times, the kids have grown up and you’re looking to go travelling now that there’s time and funds to do so. You might want to check your insurance policy first, there are some policies out there that do not cover you world wide, if you are outside New Zealand and you are disabled or die there may be no cover. One client found this with their old policy and have plans to travel extensively next year.

War & Terrorism

War and terrorism, something that has popped up in the media in the last 6 months, more so than it has before. Most specialist life cover policies will cover you if you are caught up and die in a conflict, however like the suicide comments above, there are a number of policies out there which have war and terrorism excluded by default. However, if you are applying for cover and you plan to travel to a known conflict area, you can expect the insurance company to apply a war and terrorism exclusion on you. Once you have travelled and returned, so long as you do not plan to travel back to a conflict area in the near future, we can often then have this exclusion removed.

Dumb stuff

What may surprise some are exclusions for intoxication, drug use and criminal acts. Insurers in an effort to minimise claims from people doing dumb things, they apply exclusions for these sort of things. Understandable for disability but not for life cover. If you have these exclusions on your life cover then I strongly suggest you review your cover. Because you manage to do something dumb and die, it does not mean your family should continue to pay for your mistake. None of the Life cover we arrange have these restrictions, because life cover is about protecting your family when your are not here.

Age

Age, this is always a good one. With baby boomers heading to retirement and a significant portion of them still have large mortgages, age restrictions on life cover can be a surprise. Especially at a time of life when medical things have started to pop up. There are a significant number of low advice and bank insurance polices out there that cease at age 65. If you are approaching this age and you have one of these, you need to review your cover sooner than later, now is good!

New Features

Insurance policies today have a wide number of benefits and features that just didn’t exist 5-10 years ago or they may have existed on one or two policies but are nor more prevalent. Things like partial payments for conditions that are in the early stages or just diagnosed, these would have required significant medical impact to qualify for a full claim under an older policy. Fractures and broken bones cover under disability without stand down or requirement to actually stop work for a benefit to be paid, these are now reasonably common across a number of providers. Traumatic conditions handled in a similar way on income protection. All giving you more financial support earlier. Pregnancy conditions coverage, children’s coverage, dependant caregiver disability benefits, there are many extras on policies today that make tailoring a better solution for you much easier.

Family Planning

Though these also have fish hooks, a case in point, one client we talked to had asked their previous adviser for a policy that covered them for pregnancy complications. Being 4-5 months pregnant at the time, it was an important consideration. What might surprise you is the adviser had no trouble arranging the cover. Given the client was pregnant at the time, we would expect this part of the cover to be excluded for this pregnancy. What we found on looking a bit closer, the policy this adviser selected only covered pregnancy complications between the ages of 16 and 40. What was not pointed out to the client at the time, that the insurer clearly understood, was the client being aged 41 was not covered by this benefit at all. In this case a medical policy with this sort of coverage would have been a better solution.

Impending retirement age

Another where the client had put off an operation purely for timing reasons, found themselves without the support of their income protection when they did get the operation done. What was frustrating for them was they had been talking to their adviser about the situation and the medical claim, but the adviser had not brought the impending end of their income protection policy to their attention. Given the policy document was buried in a file somewhere and the client’s focus at the time was on the medical claim and operation, not the income protection. In this case, the policy ended at age 60, which was common back in the ‘90’s when it was taken, today a typical income protection policy will cover you to age 65 or 70, though many older to age 55 & 60 policies are still around. For this client, we can arrange a new cover, but it won’t help with this particular operation.

If you have cover and you haven’t reviewed it for some time with a life insurance adviser then there is a reasonable chance that some of the things you think you are covered for may not be quite as you expect. Yes the big stuff is likely to be ok, but looming age restrictions and changes to you activity and lifestyle may mean what was good cover doesn’t cover you as well any more.

Give us a call, even if it’s just a chat to confirm everything is as it should be, you need to have confidence your back up financial support plan is going to work when you need it to.

The information is only intended to be of a general nature and should not be relied upon in any part without obtaining full details of the products and services by contacting Willowgrove Consulting Limited. All product and service details, terms, conditions and other information are subject to change at anytime without notice. Terms, conditions and fees apply to the various products and services and are available on request. A disclosure document will be provided to you on request free of charge.