When to Review Your Life Insurance Policy?

As you journey through life, your priorities, goals, financial circumstances, and responsibilities undergo several changes. You may get married, plan a family and a bigger house, or switch jobs. Considering such events, it becomes necessary to re-evaluate several components of your life to match your ever-changing needs. Similarly, every major event in life also calls for a reassessment of your Life Insurance requirements.This involves re-evaluating your coverage, the policy's terms and conditions, premium payments, etc. Reviewing your Life Insurance at the right time can ensure that you and your close ones are financially protected from life’s uncertainties. Follow these tips to determine when to review your Life Insurance policy. Also read: 5 things to consider when choosing a Life Insurance policy

Getting married

Getting married is a major life event that often requires you to re-align your future goals. For instance, you and your spouse may invest in a bigger house, start retirement planning, or purchase a car. In such cases, examining your life insurance policy and naming your spouse as a beneficiary is advisable. This is a terrific method to commit to your future goals without compromising on the same in each other's absence.Suppose you are the primary earner, and your spouse depends on you financially. It is advisable to add your spouse to your existing Life Insurance policy and opt for a higher sum assured. This will provide a vital safety net to your spouse in case of your untimely death. However, if your spouse is independent, it may be better to purchase separate policies. This might be costlier than buying a Joint Life Insurance plan , but having separate policies allows for greater flexibility in coverage options, policy terms, and beneficiaries. Also read: Getting Married Soon? Brace Yourself For These 3 Expenses

Having children

Since the COVID-19 pandemic and the subsequent inflation rates, raising children has become more expensive than ever. Keeping up with your children's needs is no easy task today, especially with rising costs for education and basic upbringing. That is why it is vital to check your Life Insurance coverage soon after you have children. By doing the same, you can add your children as beneficiaries to your current policy and enhance coverage by paying a larger premium. This coverage can later be used for their future needs, such as education, marriage-related expenses, or debt repayments.Reviewing your Life Insurance plan right after your child's birth is always advisable. Life Insurance premiums are generally lower when you are young and healthy. Reviewing your policy early may lock in lower premiums for an extended period. Delaying the review could mean higher premiums, especially if your health or circumstances change.

Beneficiary change

There is a possibility that as you age, the number of people relying on you financially rises. If you wish to provide for these members, such as your parents, spouse, children, etc., you can include them as beneficiaries under your existing Life Insurance plan. You need to review your policy’s terms and mull whether or not you need to increase your coverage amount each time you wish to add a beneficiary.

Changes in your health condition

Your health is a crucial aspect that can influence your Life Insurance coverage. For example, if you develop signs of a life-threatening disease, you can opt for critical illness riders in your policy.Similarly, your insurer may offer a bonus if you have consciously worked towards improving your health by adopting a better lifestyle. Revisiting your Life Insurance policy terms periodically and adjusting them depending on your health condition is important. Also read: Critical Illness Plan Vs. Disease-Specific Plan

Changes in your debt situation

Some loans, such as Home Loans, are long-term and can take even 30 years to settle. During this period, you may have other obligations, like children needing education funding or looking to settle down. If you have a long-term loan, adding a loan protection cover to your policy can be helpful. The cover ensures that the burden of your outstanding loan does not fall on your family in your absence. Insurers mostly sell loan protector covers as single premium plans they cover the entire Home Loan amount for a specific period.If you have repaid the debts that existed when you purchased the policy, you may want to get new insurance policies that allocate a greater percentage of income towards insurance investments.

Change in your income levels

You may have guessed that any major changes to your financial situation require a review of your Life Insurance policy. After all, the money you have in your pocket directly impacts your policy. Assume you earn a promotion, which results in a considerable increase in your income. This may encourage you to adopt certain lifestyle modifications, which may incur additional costs. A wise approach would be to boost your policy's coverage amount to ensure your loved ones can maintain their current lifestyle. You can also consider tweaking your policy coverage if there is a drop in your income level. Also read: What is backdating in Life Insurance?

You may want to review your policy depending on the above conditions or only after an important life event. However, in either case, some pre-work is involved if you decide to re-examine your Life Insurance policy.

• Before making any investment decision, it is always good to analyse major expenses. This involves getting an approximate overview of your current liabilities, including Home Loans, Car Loans, Personal Loans, and other debts, if any.
• From there, calculate a rough figure on how much you would require to achieve critical long-term goals. This may involve post-retirement plans, your child’s marriage and so on.
• Next, jot down your current income and household monthly expenses.
• After considering these points, calculate how much money your loved ones would require to meet your long-term financial aspirations. You also need to gauge how much monthly allowance they might need to remain financially stable in your absence.
• Once you have made the necessary calculations, compare the amount with your current Life Insurance coverage. If the coverage is lower than the calculated amount, it's time to renew your policy and enhance your coverage.

• Life Insurance policies must be reviewed and updated constantly to match your ever-growing needs.
• Getting married and having children would be an apt time to add beneficiaries to your existing Life Insurance plan.
• The coverage amount in your Life Insurance plan should be reviewed if you face any major changes in income or debt levels.
• Similarly, any drastic change in health conditions, for better or for worse, should prompt you to review your Life Insurance plan.