Could you be over-insured?

Last updated on November 25th, 2021 at 02:56 pm by Bill Tsouvalas

You might have come across the term “being under insured” when it comes to Life Insurance. However, it could be possible that you could be over insured. This does not only take a toll on your finances, but the lack of financial planning could lead to much needed money being lost, instead of it being used elsewhere.  We have put together three tips to avoid being over insured.

It is time for a review

You could’ve bought one or more insurance policies a few years back to protect you in future, which is great. It is not so great when you find out that the policy you have been funding for the past years does not cater towards your current, or future needs. Try going over all your insurance to see which ones are still relevant to you. This will help you avoid killing your budget by over insuring yourself with policies that are not relevant.

Your pockets are bleeding

Life Insurance is an important investment people make in their lives, but if you are over insured it can make you lose out financially. The rule of thumb is to never take out a policy that takes up most of your salary. It always goes back to our first point of reviewing and seeing what you can afford. Speaking to a financial advisor can save you on both time and money. There is always time later to update, and upgrade.

Use the tools and resources available to you

There are accredited financial advisors who can help you figure out what will work for you. Furthermore, making use of Life Insurance Calculators on insurance sites that can help pin point whether you will have enough to cover you. This will assist in tailor making a policy that works with your salary and assets in mind, making it affordable and tailor made for you. The other route is financial planning, which acquires discipline and good bookkeeping skills. If you succeed in putting aside money in a savings accounts with good interest rates, you will soon realise that you have enough to help you retire comfortably.

Check your superannuation fund

This usually affects younger Australians. When you have multiple superfunds, this can result in havinglife insurance policies for each of which you don’t need. This will also result in your balance becoming eroded. Being part of a superannuation fund has the benefits of giving you competitive deals in terms of life insurance. It also gives you competitive rates because you are covered as a group.

As much as superannuation funds could come in handy in future, the current costs for younger workers is usually too much. Especially when compared to what they are paying for. Most pay for insurance that might not cater towards their needs, since the focus is on a group rather than an individual. Having too many spoons in superfunds that automatically sign you up for life insurance policies can be a disadvantage in the sense that you can only claim for one. You could consolidate your multiple superannuation funds. Check with your company’s superannuation fund is catered towards what you need, if not perhaps it’s time to review other ways to keep you covered.