Frequently asked questions about life insurance security
In uncertain economic times, coupled with life insurance companies changing ownership regularly, some policy owners have asked what that status is of their life insurance portfolio. Below are some answers to questions that every financial adviser will be asked at some stage in their career.
- I have an existing policy-Will I lose cover if the insurance company I’m with goes out of business? NO- under legislation another insurer will take over this policy and continue the cover as long as the premium continues to be paid
- If I keep paying an existing policy right now could I ‘lose’ the premiums? NO– The only way to ‘lose’ premiums is if you make the mistake of allowing your policy to lapse. You then lose the value of your policy being a guaranteed renewable ‘contract. This would be a very dangerous thing to do as you may be unable to re-apply for insurance later if the status of your health has changed.
- If I make a claim will the insurance company charge me more for my premiums next year? NO- Unlike general insurance companies, life insurers cannot charge an additional premium just because you have had a claim with them.
- What if I happen to be in the middle of a claim and my insurance company goes out of business? The legislation directs that your claim in progress will be transitioned to the new insurer
- If another insurance company takes over my policy can they change the terms I currently have? NO-The new insurer is bound by the terms of an existing pure risk contract, including any acceptance terms. They cannot change the policy definitions nor can they add any exclusions etc.
In recent times AMP have sold their life insurance business to Resolution life, Zurich have bought Onepath, AIA have bought Comminsure and the list goes on. Hopefully the above helps with any confusion to those who have a life insurance policy (including TPD, Trauma and Income Protection) and are unsure of any implications this may have of their policies. If you have a life insurance policy in place and you’d like to discuss it further please don’t hesitate to get in touch by clicking the contact us button or by filling out our online form.
. The information is general in nature and should not be considered as personal adviceContact us for a quote