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.
Here are 3 most important moments in life when you should review your life insurance policy.
1. When your Relationships Changes
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.
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.
“Family is not an important thing. It’s everything.”– Michael J. Fox
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.
