People generally consider life insurance as a ‘buy it & forget it’ kind of deal. They generally don’t take the trouble of reviewing their life insurance policies. Ideally, you should review your life insurance policies every 12 months or so, but the same may not be possible given the many things that need your attention. There are responsibilities to be fulfilled and tasks to be carried out. Make sure that you at least review your life insurance cover every few years and definitely in the below mentioned situations.
- A major traumatic event in your life
If there is a major traumatic event in your life like a divorce or death of your spouse, you need to take a re-look at you life insurance policies. Perhaps you need to reduce your life insurance premium or you need to change the beneficiary. Even if the beneficiary passes away, you need to take a review of your life insurance policies. You have to make an independent assessment of your life insurance policies separating your emotional self from the decision-making process which may be difficult immediately post the event. Take your time, but do revisit your insurance policies.
- Change in composition of your family
If the composition of your family has changed or is about to change due to marriage or the birth of a child, its time to take stock of your life insurance policies. Perhaps you may want to start investing in a child education plan for your kid’s education planning.
- Change in professional make-up
If you’re in the process of changing your job or starting your own thing, the first thing to look into besides your immediate finances in your life insurance policies. A change in employment may entail a change in income level. Different income levels demand different life insurance needs and expectations. This will require you to revisit your life insurance planning.
- Purchase of a new home
Whenever you purchase a new home, make sure that the amount of the home loan is covered by your term life insurance plan. If not, take additional term cover. You want to make sure that if you pass away in an untimely fashion, your family will have access to funds to meet the home loan. This will ensure that they always will have a roof over their head.
- Acquiring a big new debt
If you are going to take a new loan, it would mean added liability on your loved ones after you pass away in an untimely fashion. You need to make sure that your life insurance policy has adequate cover for your new loans. For instance, if you purchase a new car and take a car loan for the same, you do not want the burden of the car loan passed on to your loved ones after you breathe your last. At the same time, you wouldn’t want the luxury of the car taken away from them either. Hence, review your life insurance plans when you acquire a new debt.
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