If you hold life insurance as part of your financial plan, you have taken the heavy lifting off you and your loved ones. However, it is important to consider that as your life changes, so will your insurance needs.
It is vital to regularly re-evaluate your coverage, especially after any life changes. We provide three instances when it could be time to check your level of cover.
The number of dependants has changed
If your number of dependants have changed, it’s important that you adjust your policy and evaluate how much more or less coverage you will need to protect your family should the unexpected happen.
If you are recently married, you should ensure both you and your spouse are adequately covered. If you are expecting more children or you are taking care of your parents, siblings, it is important to re-evaluate your coverage.
As the main purpose of your life insurance is to provide for your loved ones in the unfortunate event of your death or inability to earn income, you should ensure that your policy offers enough to be able to take care of your financial dependants.
Your financial position has changed
Besides providing for your loved ones, life insurance is also aimed to pay off any existing debts or recurring financial obligations so your family doesn’t inherit any costs they may not be able to cover on their own.
On the other hand, if you finish paying off debts, you are able to reduce the amount of coverage as you no longer have to meet these financial obligations. Therefore, you may save money by paying a lower premium and utilise the extra funds to grow your wealth.
Your career and Income have changed
Other life changing events can be starting a new job, earning a promotion that results in a salary increase or moving into self-employment as a business owner. If your salary has grown since you purchased your life insurance policy, it may be time to increase your coverage to ensure it protects you or your loved ones in a time of need.
Whether you recently sorted your insurance or you have held a policy for years, it is always important to review your coverage every year adjusting to the changing circumstances in your life.
Source:
Patterson & Associates Insurance, 2018: https://piainsure.com/indicators-that-you-should-re-evaluate-your-life-insurance/
MetLife, 2018: https://www.metlife.com.au/blog/blog-home/insurance/When-should-I-check-my-life-insurance/
