Ask these questions when choosing personal insurance
30 April 2019
5
min read
Your ability to make a living is among your greatest assets, so know the smart questions to ask when choosing your personal insurance.
Personal insurance provides a financial safety net to help take care of yourself and your family following an unexpected event such as illness, injury or death.
There are important questions to ask when choosing life insurance that’s right for you.
When it comes to insurance, it is also valuable to understand how your insurer may perform when you need to make a claim. For the first time, you can compare how different insurers handle claims and disputes1 through a new online life insurance comparison tool.
Consider asking these five questions when choosing your personal insurance:
What type of personal insurance do I need?
You may need one or more different types of insurance. Some types of personal insurance include:
Death cover – In the event of your death or if you suffer from a terminal illness, this cover can provide a lump sum to help keep your loved ones financially secure.
Total and permanent disability (TPD) cover – TPD cover can provide a lump sum to assist with living expenses, debts and medical costs if you suffer an injury or illness and are unlikely ever to work again.
Income protection cover – If an illness or injury means you can't work for a period of time, income protection can provide you with an income to help meet your living expenses.
Can I get life insurance through my super?
The Australian Securities and Investments Commission (ASIC)’s MoneySmart website2 says most super funds offer life insurance, with eligible individuals typically given default death cover and TPD cover. Some super funds, including QSuper, also automatically provide eligible members with automatic income protection cover.
QSuper offers generous, affordable default insurance cover, with the flexibility to personalise the cover according to your circumstances.
MoneySmart says there are benefits to getting your life insurance through super, such as it is often cheaper, it is easy to manage, and you can usually choose the amount you want to be covered for.
Permanently opt in to keep your insurance cover
To protect your super balance, from 1 July 2019 QSuper will automatically cancel your insurance cover if we do not receive any money into your account for 13 months. You can prevent this from happening by permanently opting in to cover or by having funds added to your account.
Log in to Member Online to review your insurance cover and consider whether to opt in.
How much insurance do I need?
Your insurance needs – including death cover, TPD cover and income protection cover - will reflect your personal circumstances, which may include whether you are single, have a partner or a family.
You may also want to work out how much money your family could already receive if something happened to you and you lost your earning power. This may include savings, paid leave, shares, or superannuation. These amounts may be taken into account in determining how much you would then need in insurance.
Use our Insurance Needs Calculator to help work out how much insurance you may need.
What does the insurance policy cover?
MoneySmart3 recommends you always ask what’s included and excluded in each policy.
You may also want the flexibility to personalise your cover to suit your circumstances.
You can find out key features, fees, commissions, benefits, risks and the complaints handling procedure for any policy you are considering by asking for the product disclosure statement.
When checking what a policy covers, you may specifically want to ask, among other things:
- What events or illnesses are covered by the insurance policy?
- What is the level of cover?
- What are the ongoing costs of the cover, such as whether the premiums will increase, and when?
- How your medical history might affect the policy?
- Are there any exclusions?
How can I have confidence in my claims experience?
You can now gain some insight into what your experience may be like in the event you need to make a personal insurance claim from your insurer or through your super fund.
A 2016 review of claims handling by the Australian Prudential Regulation Authority (APRA)4 found consumers deserved better quality, more consistent and more transparent data about insurance claims, including how long it took for an insurer to handle a claim and how many claims were disputed.
As a result, you can access new tools by the Australian Prudential Regulation Authority (APRA) and ASIC that compare how life insurers perform when handling claims and disputes.
ASIC’s MoneySmart online life insurance claims comparison allows you to compare:
- The percentage of claims accepted by the insurer
- The length of time the insurer takes to pay a claim
- The number of claims-related disputes
QSuper’s insurance provider, QInsure, recorded the the fastest income protection claim decision times, and the highest income protection claim approval rates of all superannuation insurance providers that submitted data to ASIC’s new Life Insurance Claims Comparison tool.5
Find out more about QSuper Insurance and log in to Member Online to review the insurance cover you hold.
1 Media Release, 29 March 2019, APRA and ASIC publish world-leading life insurance data, Australian Securities and Investments Commission, moneysmart.gov.au
2 ASIC, MoneySmart, Insurance through super, accessed 17 April 2019, at www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/insurance-through-super
3 ASIC, MoneySmart, Life Insurance, accessed 17 April 2019 at www.moneysmart.gov.au/insurance/life-insurance
4 Australian Prudential Regulation Authority, June 2018, Life Insurance Claims and Disputes Statistics, at www.apra.gov.au
5 https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/life-insurance-claims-comparison-tool Data covering the period 1 July 2017 to 30 June 2018