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Tips for structuring your life insurance in a changing world

Grant Willis

By Grant Willis
Head of Life

7 August 2020

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Life after lockdown means things have changed for many of us – and that could include your needs when it comes to life insurance. We caught up with Grant Willis our Executive Manager, Life, to find out some simple ways you can review your life insurance needs.

How can life insurance help you?

Life insurance can help to protect the lifestyle that you have worked so hard to create, as well as the people you love. Maintaining your current cover for as long as you might need it  may be the best option for you.  But if your circumstances have changed, there are some simple options you can discuss with your financial adviser, which could mean you don’t need to spend as much on your personal insurance by restructuring your cover.

Which premium structure is right for you?

Your life insurance premiums can be structured as either stepped or level. Which structure you choose affects the cost and profile of changes to your premiums over time. You can also choose a combination of both.

  • Stepped premiums start lower but increase yearly as you get older. This is because your likelihood of claiming increases as you age. As a result, changes in your yearly premiums tend to be gradual.
  • Level premiums start higher but they usually stay constant over the life of your policy. This makes budgeting easier and can even potentially save you thousands over time. 

Choosing a stepped premium structure might be a good option if you only need insurance in place for a specific period of time – or your need for insurance might reduce as you age. 

Either option could save you money over time, so it is well-worth checking with your financial advisor to determine which option best suits your insurance needs. 

Do you have the best income protection benefit period or sums insured to suit your needs?

Your benefit period is the length of time you receive payments from your insurer if you are unable to work due to one of the reasons specified in your policy. A longer benefit period usually means your premiums are more costly. 

Your benefit period could be two years, five years or until you are aged 65 or 70 years old. As your lifestyle changes, so might your benefit period. Assessing your insurance needs regularly ensures you don’t pay for cover you don’t need. 

For example, if you have young children or have just purchased a new home, you might have an increased need for income protection. However, as your get closer to repaying your mortgage, or have greater financial security, you may decide you no longer need life insurance cover dollar matched to your initial lending.   

Check your waiting period

The waiting period you select directly affects your premiums for income protection policies. This is the length of time you will need to wait before you can start receiving payments after a claim is accepted. Usually the longer waiting period you have, the lower your premiums will be. 

Waiting periods can be anything from two weeks to two years.  When setting the waiting period, you might want to consider how long you think you can manage your household expenses without an income. Other factors to consider include whether you have any annual leave that you can use or if you have savings set aside which you could rely on.

Speak to a trusted expert to help you review your life insurance

Talking to your financial advisor is a great way to help determine if some of these options could be right for you. They can assess your insurance cover and work with you to structure it to suit your budget, lifestyle and circumstances. You may also be able to save money by having all your cover with one insurance company.

Looking for a financial advisor? We can help you here.


The information in this article has been compiled from various sources and is intended to be factual information only. Full details of policy terms and conditions are available from Asteron Life Limited or your financial adviser. For advice on product suitability, please contact your financial adviser. While we take reasonable steps to ensure that the information contained in this article is accurate and up-to-date, it is subject to change without notice. Asteron Life Limited and its related companies does/do not accept any responsibility or liability in connection with your use of or reliance on this article.

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