Protect Well

PROTECT WELL

How Often Should You Review Your Insurance Policies?

28 September 2018

3 mins read

Did you know that insurance policies need to be reviewed?

Life insurance policies are not something you buy once and never revisit again. It is important to review your policies periodically.

The reason behind this is to ensure that you continue to have adequate protection for the future of your loved ones and to safeguard your income earning abilities despite all the life changes you may go through. After all, the benefits of life insurance are not so much for you, but for the people who depend on you.When your life or income earning abilities change, so does your need for protection.

We take a look at the three most important moments in life when you should review your life insurance policy:

Life event 1: When your relationships change

Relationship change here does not refer to a change in your Facebook relationship status but a permanent relationship change, such as a marriage, a divorce or the birth of a child.

As a rule of thumb, whenever you welcome an addition to your household, schedule a review of your insurance policies. You may want to include this new person as a beneficiary of your policy, or take into account their living expenses to ensure that your sum assured will cover for this too.

The new addition isn’t just limited a new child, it could also refer to an aging parent or a relative who has moved in to your household. While it is ideal for parents and older siblings to retire with sufficient funds to live on their own, often times health issues or certain limitations means they may rely on you to get by financially and physically. Take their retirement needs and expenses into account when reviewing your policy, so that their living costs will be taken care of in the event of your absence.

Life event 2: When your career changes

A career change usually comes with a change in financial status. Whether it’s a promotion or an increment, an unexpected bonus payout or starting a new business, all of it calls for new financial decisions to be made.

With an increase in salary and expandable income, would you want to increase your sum assured to better meet your growing lifestyle needs and increase your financial cushion? Take this into account when reviewing your insurance policy.

At the other end of a spectrum, losing a job also calls for cutting down on expenses. Would pausing your premium payments be one of the cost cutting measures? If so, speak to your life planner to see if a premium holiday can be enforced while you secure employment.

Life event 3: When you experience a financial change

When you commit to a financial loan to purchase a car or home, or apply for a personal loan like an education loan, take the value of the loan’s installment and its duration into consideration. You could also include short-term debts such as sizeable credit card bills into the calculation.

The purpose of doing this is to ensure you do not saddle on your loved ones with the responsibility of servicing these debts in your absence.

Have you allocated a sufficient amount to service the debt in the event that you are not able to pay the installment? Ensure that your life insurance policy provides for this expense.

If you find it difficult to remember planning in advance for a review, schedule an annual review of your insurance policies. Your life planner should be able to discuss your current and future needs while also sharing an update on your fund performance (if you opted for an investment-linked life insurance policy).

Additionally, request for your agent to contact you whenever there is a new feature or add-on that is suitable for your needs. This way you will have the option to increase your coverage as and when you need.

How often do you usually review your life insurance policies?