Reviews can make a world of difference

AFRM Adviser, Philip Hatherly, talks about reviews.

Life is full of changes, and as your circumstances evolve, so do your insurance needs. Whether it's a new job, an increase in income, or the addition of a new family member, these changes can significantly impact the relevance and cost-effectiveness of your life insurance policies. That's why regular reviews are a crucial part of life insurance planning.

When we first meet a new client, we gather comprehensive information about their situation to provide full advice and recommend the appropriate levels of life insurance. However, as time goes on, various factors such as debt levels, job changes, and family growth can alter the initial circumstances. This means that the insurance policies that were relevant on day one may no longer be suitable a few years down the line.

Our review process is designed to address these changes. While there may not be radical changes year by year, over a period of three to four years, it is worth revisiting the original recommendations. We look at what has changed since the initial advice was given and update the recommendations accordingly. For example, if a client has paid down a significant portion of their mortgage, built up their superannuation, or experienced an increase in income, we assess how these changes relate to their current policies and determine if any adjustments are needed.

A classic example of the importance of regular reviews is a client who initially had policies rated for a high-risk occupation, such as a hands-on tradie. If this client later moves into a supervisory role and becomes mainly office-bound, their occupation rating improves, leading to lower premiums for the same amount of cover. However, clients often forget to inform us of such changes, which is why we send out annual review emails to remind them to update us on any significant changes in their circumstances.

Regular reviews not only ensure that your policies remain relevant and cost-effective but also help you make informed decisions about your coverage. If your circumstances have changed for the worse, such as running at a loss on the risk you originally had, it is essential to update your policies to reflect your current situation. Our advice process always aims to inform clients about how their policies hold up and what they are there for, allowing them to make the best decisions for their future.