The importance of reviewing your life insurance policy
Your life insurance policy is what gives you some peace of mind that your loved ones can be taken care of, should you pass away.
But that ‘peace of mind’ will still need a little piece of your mind occasionally, as it’s important to review it every now and then.
Why reviewing your life insurance policy is important
When you set up your life insurance policy, you would (or at least should) have been thinking about those in your life you’d like to care for should you pass away. Whether that’s your partner and/or kids, those loved ones are likely ‘built in’ to your existing policy.
Similarly, you would have factored in your job, living situation, and other major life considerations.
So should one or more of those life factors change, that’s your sign to consider reviewing your life insurance policy to match.
Key reasons to review your life insurance policy
We all love a good list, so here’s one with some of the main reasons why you might want to review your policy.
Marriage (and its opposite)
Approximately 19,000 Kiwis get married or have civil unions each year – that’s a lot of love. Conversely, there are roughly 7,500 divorces in Aotearoa each year as well – that's a lot of… reasons to review your life insurance.
After all, your life insurance policy will nominate someone who will receive the payout. Keeping that updated with your spouse – or removing your not-spouse – is a great reason to review your policy.
Welcoming a baby
Congratulations! Your tiny-fingered, chubby-cheeked bundle of adorableness has turned your world upside down and turned your sleep schedule to mush. Worth it!
Naturally, your sleepy brain probably wants nothing to do with reviewing policy documents, but it is an important time to review your cover to ensure your little one is accounted for. Especially since the average baby costs an estimated $16,000 per year!
Career advancements
A change in career can mean a change in your income, which could have a flow-on effect with your spending habits and assets.
Which also means a good time to double check your life insurance policy to see if it needs any updates to align with your lifestyle.
Buying a home
In today’s world, buying a home may seem like a pipe dream, especially since in our Kiwi Concerns Report, we found that a massive 74% of home buyers were feeling locked out of the property market.
But if you have managed this incredible feat, you may want to review your life insurance policy. You may wish to ensure that it covers enough to pay for the property, so your partner or family won’t have to worry about mortgage payments in your absence.
Tips for effective policy reviews
Here are the some of the key things to consider when doing a life insurance policy review:
- The level of coverage and if it’s still enough for your situation
- Who your nominated beneficiaries are
- Whether a financial advisor would be useful at this point
- Whether you could get better value from another insurance provider
Life insurance comparisons
Just because it has the word ‘life’ in the name, doesn’t mean you’re locked in forever.
Part of a life insurance policy review can be to ask for quotes from different insurance companies. It’s important to compare life insurance policies regularly to ensure your policy is still meeting your needs or if there is a more suitable option for your situation. The cost might be higher elsewhere, but may also come with more suitable benefits, or vice versa. However, if you are considering switching your life insurance policy, there are several things to consider. As an example, if you switch, you may be subject to a long waiting period before being able to claim on the new policy. If you have a new medical condition, this could also be a barrier to switching, as you may not be entitled to the same cover options, level of cover, or price that you were before. There may also be other risks to switching cover, depending on your circumstances. Consider all variables carefully before switching life insurance providers.
Before making any big decisions or changes, be sure to check all your options, including your current cancellation policy and the benefit options of any policies you are considering. OneChoice Life Insurance could be a helpful tool to protect your family financially should something happen to you. Get a quote online today!
4 Nov 2024