How Often Should I Review My Life Insurance Plan?06 Mar 2021
You’ve bought your life insurance plan, your policy is officially in force and you ensure it remains that way by paying your premiums on time or when its due. So you’re all set, right?
Insurance isn’t something you purchase once and forget about. Because life happens, and your circumstances change as the years go by. So it’s important that you update your life protection plan accordingly to ensure your coverage remains adequate to safeguard your loved ones.
In general, you should review your life policy annually. It may seem tedious to do so, and there may be years where nothing much has changed. Nonetheless, it’s good to get in the habit, especially in preparation for the following key milestones:
1. Getting married and starting a family
Tying the knot is one of those times when you should schedule a policy review. The same rule applies whenever you and your spouse welcome a child into your family. You will want to include them as your beneficiaries and relook at the sum assured to ensure their living expenses are taken into account.
2. Changing careers
If you are switching careers, especially from a low occupational risk career to a higher one, this is the time to check for an upgrade to include better and more comprehensive coverage.
If you’re leaving the 9-to-5 to start your own business, this is also the time to reassess your coverage. Chances are, you’ll have to take a pay cut in the early years of your new business venture, so you may need to reduce, or even increase your coverage, depending on your current debts and other financial commitments.
3. Purchasing a new home and / or car
This is another major life event which calls for a review of your life coverage. These major financial commitments are considered debts, so you’ll want to include them as part of your sum assured so that your loved ones can still pay off the loan in case anything happens to you.
As you approach your golden years, this is when your priorities change again, and where another review would be necessary.
With your children all grown up, and most of your debts paid off, a high level of coverage may no longer be necessary for your life insurance, and you can instead focus on your hospitalisation and medical coverage.
Do work closely with your insurance agent to regularly review your life insurance plan. This will not only help keep your loved ones protected, it also serves as a check against being overinsured, so that you don’t pay higher-than-neccesary premiums.