Often property investors will ask me: “Bill, what’s the actual process for getting insurance?”

Because as an insurance adviser I know it can take time; it’s not a tick-box exercise.

So, in this article, you’ll learn how to get insurance and what to expect.

Just so you know, in this article we’re specifically talking about personal risk insurance. That’s:

• life insurance
• trauma insurance
• income protection insurance (and similar policies).

So let’s dive in.

Step #1 – Discovery meeting with an insurance adviser

Your first step is to book an initial meeting with an insurance adviser. This is often called the Discovery meeting. This is where you sit down and discuss your overall situation.

Your insurance adviser will ask you personal questions like:

• Are you a parent (single, or with a partner)?
• How many properties do you own?
• Do you have any family history of cancer?
• Have you had any serious health problems?

This takes about 45 minutes to an hour, depending on the details. The insurance adviser will try to identify potential risks so they can recommend the right type of insurance for you.

If you already work with our team here at Opes (for instance, if you’re working with Opes Mortgages), then this process can be quicker. That’s because we already have some of your financial information.

Step #2 – Get your insurance recommendation

After the Discovery meeting, your adviser will draft a recommendation. This is called a Statement of Advice.

This document will outline the types of insurance your adviser suggests. The recommendations are all based on your personal situation. This acts as a starting point for you to discuss with your adviser.

Here’s what one looks like:

Remember, there’s no obligation when you get your Statement of Advice. You don’t have to go ahead with it as it is written.

Eighty percent of the people I work with change at least one thing. This is often because you might want a lower premium (the monthly cost of your insurance).

So, of course, your insurance adviser will make it work within your budget.

For example, let’s say Hayley is a single parent to a child under 5, with a $300k mortgage. She’s earning $80k a year.

Let’s say I suggest she take out income protection insurance. That means if she gets sick and can’t work she’ll get paid by her insurance company.

And I might suggest she takes out a policy that will pay her until she turns 65 if that happens.

The cost of that insurance might be too high, so we might change it so that if she gets sick and can’t work the insurance company only pays her for 5 years.

That’s less risk for the insurance company, so the cost of the insurance (premium) is lower.

More from Opes:

• Why might an insurance company decline my claim? (Article)
• Who will pay my mortgage if I die? (Article)
• Opes Insurance vs other insurance companies (Article)

Step #3 – Submit your application to the insurer (underwriting)

Once you’ve agreed what insurance you’ll take out, your adviser will submit your application to the insurer.

The insurance company then reviews your application. This is often called ‘underwriting’.

This process can take several weeks, especially if you’ve got health concerns.

For example, John may have taken tests for potential heart disease last year. Nothing came of it, but he has to tell the insurance company anyway.

The insurance company will take this into consideration to weigh the risk. Sometimes they will call you with more questions. They do this so they can offer you a fair cost based on the risk you pose.

While your application is under review, they may give you interim cover. This gives you temporary protection until your policy is fully approved.

Step #4 – Medical examination (sometimes)

Some people need to get a medical examination before the insurance company approves insurance.

They might need to take a blood test or provide a urine sample. It will depend on the type of cover you want, your age, and the amount of insurance you’re taking out.

If Ted is 70 years old and says “I want $5 million of life insurance” the insurance company might get suspicious.

And if 30-year-old Hugh discloses that a few family members have had cancer, diabetes or heart disease ... he will also need a medical.

Your adviser will often let you know if they think you’ll need to get a medical exam. But, you should almost always be prepared for this step, just in case you need to do it.

Step #5 – Get your policy approved

After underwriting your insurer will approve your policy. They’ll often send you an email.

They’ll let you know when your first premium (payment) is due and how much it will be.

They’ll also tell you to look out for the Welcome Pack from your new insurer. You are now fully covered.

Step #6 – Ongoing reviews

You should also review your insurance. That’s because over time you may not need as much cover.

You might be able to cancel or decrease the amount of insurance you have.

Or, you might have a child and decide you need more insurance.

That’s why I recommend you review your insurance every few years; you don’t want to pay more for insurance than you need to.