Upgrade Old Life Insurance Policy, or Add a New Policy?

Hi All,

Sorry to bother.. I'm 55yo and my wife is 51yo. We have a life insurance policy each with Noble Oak (via a broker years ago), both of which are about 25 or maybe even 30-year-old policies now. Wife is in great health.. me not as good but no complaints, but I figure I'll drop well before she does. We earn barely above minimum wage, and with each policy only being worth about $250k each, if I pop my clogs before she does, she won't be left with much for her senior years. So I'm thinking I might secretly double my contribution/s to my life account so she gets a nice surprise when I inevitably go tits-up, to cushion the obviously crushing blow.

So to the question: would I be best to just double the contribution I make now to my existing Noble Oak policy, or would it be better/smarter to make an entirely new one for the new cash instead, so there are two policies for me? Also let me know if Noble Oak are not worth persisting with - perhaps there are better out there these days?

We have two teenage kids, and owe $100k mortgage, but no debts otherwise - both non-smokers.. just thought I'd mention. :-D

Thanks V Much,
UniQualz

Comments

  • +2

    Hi,
    It looks like you might have Term Life with Future Benefit (meaning you can increase your Cover by $100K without Medical Evidence).
    But consider that, from what you have said, you are really locking away available funds until the clogs are popped…
    Maybe there are other options to consider.
    Certainly, don't cancel your cover. Maybe see if an extra $100K cover is what you need.

    • +1

      The Barefoot Investor offers a tip on negotiating the cost down
      a bit on Insurance [eg, after 1st year]. He gives his reader
      a little Script to use on the phone when making the call.

      I'd think it'd be good to get the Cost down first, ie,
      before raising the amount to be paid-out at end-of-Life.

      (My logic is that you might be able to apply the Saving
      to [part of] the amount, by which your final premium will rise.

      Barefoot may also have more tips, that I don't recall ATM…

  • +1

    It's not just as easy as "doubling your contributions" to increase your pay out.

    Without knowing the particulars of your policy, you will have been covered way back when for conditions A through Z. You'll be covered for those for the life of the policy under the terms of that policy.

    Any new/additional cover will be provided under the terms of today's policy that may be markedly different to your existing one (perhaps better, perhaps worse) whether you take it with Noble Oak or anyone else. It will certainly exclude any pre-existing conditions you have now and so will likely be further quite different to your current arrangement.

    Life insurance is arguably the most technically complex area of retail financial services and so you must be precisely dure as to what you are/aren't getting involved in.

  • +2

    Keep in mind, there are some gotcha's for multiple policies:

    1) if you take out two life insurance policies with the same insurer, some insurers may apply the maximum cover amount to both policies. Therefore, your insurer may need to reduce your cover so that you don’t exceed the maximum limit.

    2) you should be able to claim on multiple insurance policies, provided each of your funds or accounts are independent from one another - I have heard this is at the underwriter level, not reseller!

    There are many companies offering insurance policies in the Australian market, but many are in fact underwritten by a limited number of insurers operating under various brand names. Four companies account for three-quarters of the general insurance market. They are Insurance Australia Group (IAG) with 29% of the market, Suncorp Group with 27%, QBE with 10%, Allianz with 8%.

    What it means is that, if your say Coles Policy and NRMA Policy are both from IAG, they will payout only one (the max among two).

    https://www.canstar.com.au/life-insurance/multiple-life-insu…

    • +1

      This right here.

      They will only pay over what the other policies are due for you.

      Eg, You pay policy A for 250k payout. You pay policy B for a 500k payout. You will receive 250k from policy A, and 250k from policy B.

      Keep in mind as well, policy A insurer may ask you to claim from policy B instead and vice versa ->ie, more headache.

      • +1

        Not really re headaches, you're dead, not your problem.

  • Thanks everyone for the astounding replies. Helpful and amazingly knowledgeable, as always. I'll trawl through some online info and edumercate myself a little more before acting.

  • I would recommend to take professional advice before taking any step/ amending anything. Most financial institutions provide first session free of cost with no obligation. Try contacting your local bank branch to discuss with their financial planner/ advisor. They can provide personal advice tailored to your situation & needs. Online forums might not cover all aspects.

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