Regular interaction with your life insurer is a must

Reviewing your life insurance policy at the beginning of each year is essential as the type of cover you need may have changed over the last 12 months. So says Lenerd Louw, CEO of South Africa’s first fully direct lifer insurer, 1Lifedirect.

"It doesn’t matter what type or how much life insurance cover you have bought, but it is important to review it at least once a year. It is also important to review your policy when your lifestyle changes because a new job or the birth of a child could mean you require additional cover," says Louw.

He explains that when you take out life insurance, your life insurer determines your risk profile by assessing factors including your occupation, hazardous pursuits in which you participate, your country of residence and your smoker status. If any of these factors change, your risk to the insurer will change as well; accordingly your policy would need to be reviewed and updated.

For instance, if you have taken up such hazardous pursuits as sky-diving or scuba-diving on a regular basis, you have an obligation to notify your life insurer in writing within three months.

"If you don’t and you are injured, or even killed, there may not be a payout," says Louw.

The same goes for people who take up the habit of smoking after their policy has been underwritten. They are required to send their life insurer written notification within three months of starting smoking, otherwise they could run the risk of having their claim reduced or even rejected should they develop a dread disease such as lung cancer.

Louw also stresses the importance of informing your life insurer if your primary occupation changes as certain occupations put you at a greater risk.

"It is critically important that you let your insurer know if you change jobs because, if your new position puts you at a greater risk of becoming disabled, your policy must be adjusted to ensure that you are still covered if anything happens," explains Louw.

He reminds people to also make sure that the beneficiaries nominated on their life policies are up to date and relevant as well.

"If one of your listed beneficiaries has passed away, you must remember to change the details on your policy. Likewise, if you have a new baby in the family and you would like to list that child as a beneficiary, you must let your insurer know about it," says Louw.

He points out that a life policy is not something you take out and then forget about until you need to make a claim.

"Your life policy is something that should be checked and updated regularly, just as you would review your short-term insurance policy if you bought a new car or moved house. You just never know when you may need to make a claim; so, it is important that all your details are relevant and that your policy provides adequate cover for you and your family should anything untoward happen," concludes Louw.