Lock in level rates when the client is younger
Many insurers offer insurance policies that are tailor-made for graduates or newly qualified professionals. These policies often allow higher benefit limits on both lump sum and income protection without the need for a financial assessment, meaning cover can be in place to insure the income the individual is expected to earn in the coming years.
A key benefit to setting up insurance for life insurance at a younger age is the fact that it can be easier to have the policy underwritten. It can also be cheaper. For example, you may be able to lock in level premiums at the rates charged for a 25-year-old.
Find out how parental leave and ceasing work impact cover
Most insurers do not treat maternity leave as unemployment, unless the insured has ceased work entirely with her employer.
Life and trauma cover are generally unaffected by periods of unpaid leave or exiting the workforce, as these cover types are not linked to employment.
However, some policies, particularly those linked to employment, might be affected by a change in a client’s work situation. For example, income protection policies can remain in force, but the applicable definition may vary. After the individual has been unemployed or on leave for 12 months or longer, a claim may be assessed against her ability to perform any occupation, instead of her own.
Look into specific cover for stay-at-home parents
The cost of replacing someone to provide childcare, transportation, household cleaning and cooking, along with family management, can be higher than replacing employment income. To ensure household help can be funded in the event of disability, stay-at-home parents, men and women, should consider taking out home duties TPD or home duties income protection policies.
As always, read the fine print when choosing cover
While home duties TPD or home duties income protection may be suitable for many people, the definitions for these policies are generally more difficult to meet than occupational TPD or standard income protection policies. Home duties TPD and home duties income protection definitions usually require that the insured cannot perform all of their household duties, including cooking, cleaning and childcare. Therefore, if an occupation-based TPD (any or own) and/or a standard income protection policy are already in place, consideration should be given to retaining these policies, especially if the client may return to work at a later date.
Consider keeping the policy in place if your client postpones retirement
Australians are living and working longer. Traditionally, disability insurance policies have ended around age 65, with only life cover available from that date. However, many continuation options are now available for professionals working longer.
Katherine Ashby is senior product technical manager for life insurance at BT Financial Group
