When Should You Review Your Life Insurance Coverage?
If you have purchased a life insurance policy, then great! But your job is not over. Whether you have a term life insurance policy, an endowment plan, or any other type of life insurance, you must review the coverage periodically to ensure that your family has sufficient financial protection.
If you are not sure how often you must review the term life insurance plan, then you can follow the thumb rule, i.e., review it every year. Reviewing the life insurance policy annually must be a regular financial practice. After all, you don’t want to find yourself in a situation where you are underinsured or paying more than necessary.
Life changes constantly, and you must adjust your insurance coverage accordingly. Below are a few important events that may occur in your life, and you may have to review your term life insurance plan and make necessary changes as needed.
Your health condition has changed
If your health deteriorates or you are diagnosed with any critical illness during the policy period, then you may want to review your term life insurance policy and see if the coverage is sufficient to help your family take care of their everyday needs in case something happens to you.
Furthermore, you can consider buying a rider to get additional protection against critical illnesses. This will help your family get an additional payout.
You acquire debt
If you have availed any big-ticket loan like a home loan or a business loan, then you may want to review your life insurance policy and increase the cover. If something happens to you, then the last thing you want for your family is to bear the burden of loan repayment. By increasing the coverage, your family can utilise the amount to pay off the loan and be debt free.
You get married or have children
If you got married or had a baby recently, then you would have the added responsibility of taking care of the new family member. This may be a good time to review your term insurance plan, increase the coverage, and add your spouse or child as one of the beneficiaries. If you are not able to increase the cover right away, then you may consider doing it after 2-3 years.
Increasing the cover will help you secure your family’s financial future. If something happens to you, then your family can be financially independent.
You want to change or add beneficiary
Sometimes you may want to change the beneficiary of your life insurance from your children to your spouse or any other family member who is financially dependent on you as your children have started earning. You may want to add your parents as the primary beneficiaries. Whatever the situation, when you change or add a beneficiary, it would help if you review the policy coverage and increase or decrease it as per your current financial situation.
Reviewing your life insurance coverage periodically is vital. It helps you make necessary changes to the insurance plan so that you have a strong financial cushion for your family in your absence.
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