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As with any type of monthly payment, there comes a point where you ask yourself if you really need it. Or perhaps there are more affordable options out there? In any case, reviewing life insurance is bound to come up at some stage.
It’s needed to ensure it can give your family the protection they deserve. Otherwise, you may be left with inadequate cover or potential gaps in protection.
In this article, we’ll look at some questions you need to ask yourself when reviewing your policy. That way, you can ensure it continues to meet your goals and provide support for your loved ones when the time comes.
*This is a collaborative post – for more details – please see my Disclosure Policy
Tips For Reviewing And Updating Life Insurance
Did you get the right type of policy?
Everyone has had buyer’s remorse at some point. Perhaps the policy made sense at the time, but now not so much. On the flip side, you may find yourself needing more cover as your family grows or you take on other responsibilities.
Take some time to consider the type of policy you need and review the options available.
Term life insurance is often the most cost-effective option if you just want simple protection. It provides basic financial protection for a specific time. If you want a more extensive cover, whole life insurance may be a better choice.
Take stock of your financial situation
Life has a way of making things easier or harder for us. As it unfolds, your income, expenses, debts, and overall financial health may undergo significant changes.
Review your policy considering any major financial adjustments, such as a salary increase, new debts, or changes in spending habits.
- If you experienced a significant increase/decrease in income
- New financial responsibilities, such as a mortgage, car loan, or childcare expenses
- If you have paid off any substantial debts
- If you’ve recently lost/changed jobs
Adapting to life’s milestones
Life insurance evolves with different life stages. Whether you’re getting married, having children, or sending kids off to university.
Each of these milestones can impact your financial responsibilities. This means your family needs to be prepared should anything happen to you.
- Has the size of my family changed?
- Are there additional dependents, such as ageing parents or children?
- Have my children completed their education or taken on financial independence?
Maybe your kids have grown up and left the house? In which case you might want to reduce your cover. Or if you’ve just had a baby, you need extra protection. Either way, keep an eye on any changes.
Review your existing cover
Inspect the terms and conditions of your existing policy. Understanding the specifics is crucial for making informed decisions about necessary adjustments.
- What type of life insurance do I have (term, whole life)?
- Is the cover amount sufficient for my current needs?
- What are the policy’s investment components, if any?
Consider health changes
Your health can significantly impact your insurability and premium rates. If you’ve experienced improvements in your health, you may be eligible for better rates.
- Have there been changes in my health status?
- Have I adopted a healthier lifestyle since purchasing the policy?
- If you smoke – have you quit yet?
- Would a medical exam result in more favourable premium rates?
Reassess the policy term
The length of your cover should match your financial goals and responsibilities. Assess whether your existing policy term fits your current and future needs.
- Does my current term policy provide adequate cover for the required duration?
- Have I achieved financial milestones that would reduce the need for long-term cover?
- Do I need cover beyond the original policy term?
Explore the market for better options
Don’t just settle for your current policy. There may be better options out there that better suit your circumstances. Explore the market for an idea of what’s available and could help you find the right policy at a more competitive rate.
Look around and compare different insurers and policies. Review the terms, conditions, and premiums to find the one that best suits you.
Should I change providers?
Do you feel like your current provider isn’t meeting your needs? It may be time to switch. A different company could potentially offer a reduced monthly premium. Doing research on the different policies will allow you to make a more educated choice.
It’s always worthwhile talking to your existing provider first. They may be able to offer better terms without forcing you to go through the hassle of medical checks or paying surrender fees.
Get advice where needed
If you’re not sure what your options are, reach out and get guidance from an insurance broker. They can help you navigate the insurance market and provide advice tailored to your specific needs.
Having an adviser by your side can save you time and money, so you can make a more informed decision.