FridayOL

Life insurance – it’s often one of those things we put on the back burner. Many of us initially secure a policy and then forget about it, assuming it’s ‘sorted’ and we can revisit it ‘later’. However, life is dynamic, and so are your financial needs. Failing to regularly review your life insurance coverage can leave you and your loved ones vulnerable.

Why Regular Review is Crucial

The reality is, a policy that perfectly suited your needs ten years ago might not be adequate today. Several life events can significantly alter your financial obligations and, consequently, the amount of life insurance you require. These include:

• Marriage and Family Expansion: Adding a spouse or children dramatically increases your financial responsibilities. Consider the cost of raising children, future education expenses, and providing for your partner's security should something happen to you.
• Career Changes and Income Fluctuations: A promotion, a new business venture, or even a career change can impact your income and assets. Increased earnings might warrant higher coverage, while a temporary income dip could necessitate a reassessment.
• Mortgage and Debt Changes: As you pay down your mortgage or take on new debts (student loans, personal loans), your insurance needs may evolve. Ensure your policy covers outstanding debts to protect your family from inheriting them.
• Significant Asset Accumulation: If you've accumulated substantial assets – property, investments, etc. – you'll need sufficient life insurance to cover potential inheritance taxes and ensure a smooth transfer of wealth.
• Major Health Changes: Changes in your health, or the health of your dependents, can also impact your insurance needs and premiums.

How Often Should You Review?

While there's no one-size-fits-all answer, a good rule of thumb is to review your life insurance policy every 3-5 years, or whenever a significant life event occurs. Think of it as a routine financial check-up, just like reviewing your budget or investment portfolio.

Assessing Your Current Coverage

When reviewing your policy, consider these questions:

• Is the death benefit sufficient? Calculate your current financial obligations and compare them to your policy’s payout. A common rule of thumb is 10-12 times your annual income, but this can vary significantly based on individual circumstances.
• Are the beneficiaries still accurate? Life changes (divorce, births, deaths) can render your beneficiaries outdated. Ensure your policy reflects your current wishes.
• Are the terms and conditions still favourable? Compare your policy's terms and conditions with current market offerings. You might find a more competitive rate or better coverage elsewhere.
• What type of policy do you have? Consider if a term or whole life policy is still the best fit for your needs.

Seeking Professional Advice

Navigating the complexities of life insurance can be overwhelming. A qualified financial advisor can provide personalized guidance, assess your specific needs, and help you choose the right coverage. They can also help you understand the different types of policies available and compare quotes from various insurers.

Don't Delay – Protect Your Loved Ones

Reviewing your life insurance isn’t a chore; it’s an act of responsibility and love. Taking the time to ensure your coverage is adequate provides peace of mind knowing that your loved ones will be financially secure should the unexpected happen. Don't wait – schedule a review today and safeguard their future.