Managing The Cost of Your Premium During Financial Hardship

The Suspending Cover Benefit, also referred to as a Premium Holiday, allows you to suspend your policy for a period of time due to financial difficulties.

Published January 9, 2018

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As financial hardship may be temporary, using this benefit could be a good alternative to cancelling your policy because it might be more expensive to apply for a cover again when you’re older or after you’ve experienced a change in your medical history.

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When can I suspend my cover?

Generally you can suspend your cover if your policy has been in force and paid for at least 6-12 months and you are suffering from financial hardship due to:

How do I use this benefit?

If you wish to suspend your cover, the owner of your policy will need to inform your life insurer in writing within 30 days of your next premium due date. Insurance companies that offer premium holidays only request that you fill out a form and send it through to them, so they can action it. There is no qualifying stage and you generally won’t need to provide proof/evidence of financial difficulty, as you are not covered during this time.

If you wish to reinstate your cover, you must again inform your life insurance company in writing. In some cases, if you do not ask for your cover to be reinstated within the 12 month period, your cover may be cancelled.

What are the benefits of Suspending Cover?

  • Suspension of cover and premiums for up to 12 months
  • Allows you to reinstate cover without serving any further qualifying periods
  • If you have multiple cover types, you may have flexibility to suspend one cover type and maintain another.

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What other options are available to me to make my cover more affordable?

A number of options may be available to you to help make your cover more affordable:

1. Freeze Premiums

If you are on stepped premiums, you can elect to freeze your premiums which means they won’t increase each year due to a change in your age.

2. Remove CPI Increases

So your policy keeps up with inflation, your level of cover will automatically increase by the rise in the Consumer Price Index or by a set percentage each year. You can opt out of this increase if you wish, which may make your premiums more affordable.

3. Reduce your Level of Cover

You may want to consider reducing your level of cover. This can be done at any time by simply contacting us who can arrange it with the insurer.

4. Review Policy

If you’ve stopped smoking or became healthier it might be worth asking your insurer to review your policy for possible better rates. Alternatively, shop around and compare similar policies in the market and see which ones offer the same type of cover at more affordable prices.

5. Payment Plans

Select insurers might offer to push your premium payments back as long as it is within the lapse period. Giving you a month or two to get back on your feet and then catch-up on the outstanding payment(s).

6. Fund from your Super

You might want to consider taking out life insurance through your Superannuation as it could be more cost effective.

Important to note

It is important to note that while your cover is suspended, you will not be able to make any claim on your policy.

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