A common misconception about insurance is that you only have to take out a policy once and forget about it. And while that certainly is an option, it could expose you to the risk of slipping through gaps in your insurance coverage that you didn’t account for.
In contrast, making an effort to frequently review your insurance policies allows you to evaluate whether your present coverage is sufficient or if other insurance products cater to your evolving needs. This ensures that both you and your loved ones are adequately protected if the worst were to occur.
With that in mind, let’s look at the importance of insurance policy reviews and when you should schedule them in.
What is an insurance policy review?
An annual insurance review generally involves meeting with an insurance agent or financial adviser to determine if your personal circumstances and, more importantly, insurance needs have changed. After conducting the insurance policy review, the adviser could help you reduce your insurance costs, if and where possible.
Why is an insurance policy review important?
Let’s take a look at some of the key reasons why it’s essential to schedule frequent insurance policy reviews.
You get to review your cover when your life changes
Reviewing your insurance contracts in line with reaching particular milestones in your life is an effective way of ensuring you have optimal insurance coverage for your changing obligations and financial circumstances. Such moments are known as life-changing, or insurance-qualifying, events and are an opportune time to schedule an insurance policy review.
There’s the possibility of reducing your insurance costs
There are opportunities to reduce costs. Generally as you get older, build more wealth and as children (dependents) grow older you would require less insurance, allowing you to lower your costs.
Adopting a healthier lifestyle, resulting in weight loss and quitting smoking, could decrease the cost of your life insurance, for instance. Consequently, it’s important to schedule insurance policy reviews to guarantee you’re taking advantage of all available discounts on your required coverage.
It’s a chance to update beneficiaries and policyholders
An annual insurance review allows you to update the beneficiaries of your policies to reflect any changes in your marital status or the size of your family. Similarly, you may want to add people to an existing policy, such as auto insurance.
You stay informed about policy terms and conditions
Frequently reviewing the terms of your various insurance contracts makes you more familiar with them, helping you to determine any limits and exclusions in your coverage. This, subsequently, allows you to make more informed decisions about any additional coverage you might take out or replacing your existing cover with a cheaper provider.
How often should you have your insurance reviewed?
You schedule an insurance policy review every year and whenever you experience one of the life-changing events listed below. At the very least we encourage everyone to review your insurances every two years.
You’ve purchased a property
Buying a house is one of the most significant financial decisions a person makes in their life and often requires re-evaluating your insurance coverage. It may compel you to take out life insurance, so your family can afford to pay off the mortgage in the event of your passing. Similarly, you might decide to take out income protection insurance so you can afford to keep up repayments if you’re unable to work due to sickness or injury.
Your marital status has changed
Similarly, getting married might inspire you to take out a life insurance policy – or make changes to an existing one. Conversely, getting divorced usually requires removing the former spouse as a beneficiary.
You’ve had a baby
A child represents a major change in a person’s life and can necessitate equally major changes to their insurance coverage. Life insurance is the most prominent example, although an addition to the family can cause some people to increase the benefit amount on their income protection cover.
Alterations to your home
Renovations, remodels, additions, and extensions to your property can affect your ability to make successful home insurance claims. If you suffer an accident in a shed or around the edge of a pool that your insurance provider wasn’t aware of, it’s close to certain you won’t be covered.Similarly, moving into a larger home – or downsizing when you’re an empty nester, for instance – could require increasing the coverage of your life and/or income protection insurance.
As briefly alluded to earlier, lifestyle changes like weight loss and the cessation of smoking can result in reduced life insurance and income protection cover costs. However, the reverse also applies, and unhealthy lifestyle changes can make you risky to insure, pushing up the price of your premiums.
Change in occupation
As the cost of life insurance is often influenced by the policyholder’s occupation, switching professions can affect the price of your coverage.
Meeting particular financial milestones
Achieving particular financial objectives can often result in the need for less insurance coverage, because you now have fewer obligations. For example, paying off your mortgage means you no longer have to worry about making repayments, so you may decide to reduce your life or income protection insurance. The same could be said about events like getting your last child off to college or ensuring all your children have enough for a house deposit.
Changes to your financial situation
Changes to your financial circumstances may require you to increase or decrease your level of insurance coverage. Let’s say, for instance, that you receive a large inheritance which increases your savings considerably. You’re now less financially vulnerable in the event you find yourself unable to work, so you may seek to reduce the benefit amount of your income protection cover.
In contrast, if the amount you have saved up has decreased, it’s wise to increase your benefit amount within your income protection and/or life insurance policies.
Let K Partners review your life insurance policies for maximum coverage and minimal cost
K Partner’s skilled team has decades of experience advising clients on taking out the best insurance coverage for their particular needs and circumstances. Our detailed knowledge of the insurance landscape puts us in the ideal position to review your current insurance coverage, recommend additional policies based on your needs, and help secure discounts on existing insurance premiums where possible.
Contact us to schedule your annual insurance review today
Please note that all the while the information provided above is factual in nature, it’s also intended to apply generally, and to a broad audience. Subsequently, the information hasn’t taken your personal circumstances or goals into consideration.