With life insurance in place, you can help ensure financial support for those that matter most. But have you spent time reviewing your life policy and ensuring it still meets your needs since purchasing it?
It’s important to carry out a life insurance policy review because as your life changes, your insurance needs may also change. When your annual notice to renew your home or car insurance comes through, many of us will find the time to have a quick shop around to see if we could save some money, why not do the same with your life insurance? Comparing lots of different policies is a worthwhile process and more often than not, it’s surprising how much you can save. In today’s market, it really couldn’t be easier to look at all the options available for life insurance.
We recommend an annual life insurance review because so much can happen in 12 months. It’s important to make sure your policy is right for you and your family today. Identify any gaps in your coverage resulting from a change in your circumstances, your health, or the financial needs of your beneficiaries. It’s a simple a process to update or add to your cover.
Reasons why you might change your life insurance policy
Changes In Your Family
We all know that raising a child is a huge expense and making sure they are financially taken care of is a must. If you have a new family member, it’s important to look at your current cover. The level of life insurance should be appropriate for the number of financial dependents. You need to increase your level of cover to ensure they can be financially cared for well into the future. You may also want to review your cover if your children have now reached their teens. Are you financially prepared for college? Or, alternatively, do married adult children need less protection than when they were children?
My Life Insurance Tip: There’s always an option of purchasing an additional term life insurance policy if you don’t want to adjust your existing one.
You’ve Started a New Job or Launched Your Own Business
Whenever your financial status experiences a change, your life insurance coverage may need to be adjusted as well. It’s important to account for extra income. Or it may be that you can now afford a higher level of cover which you originally had to delay. If you started your own business, your family members might not be equipped to take over the business if you die. And if you took out a loan that your loved ones could be responsible for, you’ll want to know that you have enough life insurance to cover this new obligation. It is important to ensure your cover reflects this change and it may also be wise to investigate Income Protection.
New marital status
Few changes in your life will be bigger than a shift in your marital status. For the recently engaged or married, you’ll most likely want to be sure that your partner is financially secure should the worst happen. It is also important to add your partner as the named beneficiary on your life insurance policy.
This also applies to divorced or separated couples.
Take the time to make sure your beneficiaries are up to date and reflect your wishes.
You Recently Bought a Home
If you’ve recently purchased a new home, review your policy to see if your coverage amount is enough to also pay off the mortgage. Again, paying expenses is manageable with two incomes, but could your partner afford to pay for the house all alone? Especially if you have children.
Changes to you Beneficiaries
Many people buy life insurance while they are single and name their parents or even grandparents as beneficiaries. If you have since married, have dependents, then you may want to re-evaluate your beneficiaries to reflect this. Equally, if your beneficiary passes away, is no longer involved in your life, or has become financially independent then it may be time to think about your current life insurance.
My Life Insurance Tips: Place your life insurance policy into trust and the lump sum will be paid direct to your beneficiaries. If you want your minor children to receive your life insurance proceeds, you need to assign a trusted adult who will make proper decisions about the care and welfare of your children. Life insurance companies will not pay death benefit proceeds directly to minors. As your children mature, make beneficiary changes as necessary.
You’ve Recently Taken Out a New Loan
Taking out a loan means more debt. If the loan is large enough to cause financial stress to your loved ones if you die, think about modifying your policy. A car loan is a good example of an instance where you may consider reviewing your life insurance. You don’t want this debt passed on to your loved ones.
Health or Lifestyle Changes
Have you been on a new health regime? Maybe you have reduced the seriousness of a health issue or quit smoking. You may qualify for new life insurance rates and it may benefit you to re-apply. Quitting smoking or lowering your cholesterol or blood pressure are just a few examples of when a health change can affect your rates for the better. If you changed jobs or hobbies that previously were considered risky, this is another reason to consider reapplying for life insurance. If you quit smoking and haven’t touched tobacco for 12 months then you can reapply to see if you can qualify for the non-tobacco risk classes.
Bottom line
Life insurance plays a critical role in helping families meet their financial commitments after the loss of a loved one. When life changes it’s important to look at your financial plans to be sure that your needs are covered. If you feel that your life circumstances have changed since you last purchased a policy, or it is time for your annual review, then please go to our online quote system or book a call with one of our qualified advisers. They will be happy to discuss your needs and adjust your cover where necessary.