Beating inflation – what are your options?

The only constant in life is change, which is why life insurance is designed with features like indexation to address unavoidable economic changes like inflation.

Over time, inflation could eat away at the value of your insurance payout, turning a generous amount of cover into something less than adequate.

To prevent this from happening, many insurance policies feature automatic indexation that increases the amount of your cover each year to help keep pace with inflation. Your premiums increase in line with your cover.

Is declining inflation protection (AKA indexation), an option for me?

Declining inflation protection can help reduce premium costs in the short term.

Your options

• You can temporarily decline inflation protection for one year only by calling Customer Care or through My Zurich or My OnePath Life. You’ll need to do this within 30 days of you receiving your anniversary notice. We can apply this request immediately.
• Permanently declining inflation protection can be done when you receive your anniversary notice, and up to 30 days after anniversary.  However, inflation protection can be removed at any time by contacting us. We will send you a quote for revised cover, so that you know what the new premium will be before you make the change.
  

The cost of living is increasing so it’s worth considering whether maintaining a comparable level of cover is right for you. No one wants to be caught short and face financial hardship. That’s why we recommend that you seek financial advice before making changes to your insurance cover.

Other ways to reduce premiums:

1. Consider how you’ll pay your premiums. At Zurich, we’ve been able to reduce premiums when you pay your premiums annually instead of monthly – as we spend less time processing transactions.
2. Review your protection needs regularly. Has your situation changed in a way that means you don’t need as much cover, or perhaps you need more?
3. Review your premium structure. Variable age-stepped premiums are lower to begin with, but then increase each year, as your likelihood of claiming increases. Variable premiums are ‘averaged out’ across the duration of your cover, which means they can be more expensive initially, but the total premium cost may be less if the policy is held for a long time.
4. Speak to your adviser about life insurance cover through your super. Premiums will be debited directly from your super. If you’re working and receiving superannuation guarantee payments, this can be a tax-effective strategy as super contributions are typically taxed at just 15%, rather than at your marginal tax rate. If you are considering insurance cover through super, you should be aware of contribution caps, preservation rules and how premium payments may affect your retirement savings. You should also be aware that certain features and cover options are not available through super.
5. Making positive changes to your life can reduce premiums.. If your health improves, or you’ve stopped smoking or skydiving, then you can review your policy to see if any loadings can be removed - potentially making your policy more affordable.

Remember, life insurance is not just about having peace of mind right now, it also gives you the freedom to enjoy life to the full in the future. Most importantly it provides your family and loved ones with financial security.

Speak to your financial adviser about how best to manage the costs of your cover over the life of your policy.