Jul 07, 2014,19.27 IST
Why you must review your life insurance needs regularly
Life is dynamic and keeps changing with time. As years roll by, marriage, kids, career, and other things change the scope of life in a manner we barely can predict or foresee. All these life-stage events have a direct bearing on the financial standing. It is only logical then to conclude that your life insurance requirements – something that is so closely associated with your life – needs constant reevaluation. It is important that you carry out such reviews at regular intervals. A big plus of such reviews is that you can minimize the possibility of staying underinsured. Besides, constant life insurance reviews also ensure that your financial plan keeps up with the changing patterns of your life.
How can you go about doing a life insurance review
You are the best judge of your ever changing financial requirements and so it is advisable that you take a closer look at your insurance portfolio at least once every year. This way, you will stay clued in to the current status of your insurance plan and also be able to work out a roadmap for the future.
Let us see an example: You are married and already have some insurance policies with you. Now, if you are planning to have children, you might want to consider researching about policies that will help you fund your children’s education and marriage. Accordingly, you can start setting aside funds to buy that particular policy after the birth of your baby. This way, a life insurance review coupled with foresight can help you add the right policy to your portfolio. It will not only maintain the sanctity of your financial plan but also prepare you for future expenses.
There may be occasions, when you find yourself in a fix while reviewing your financial goals and mapping them to your insurance portfolio. During such times, you can always reach out to an advisor or an insurance agent who will help you take the right decision.
With regular life insurance reviews, you can not only keep a tab on your insurance portfolio but also modify it to suit your growing monetary needs.
What you must keep in mind during a life insurance review
1. It’s a known fact that financial commitments only increase with time. Be it children’s expenses or healthcare-related costs, there is no end to mounting expenditures. However, if you review your life insurance requirements diligently, you will know how you can meet these expenses by simply increasing your life cover.
2. As financial responsibilities increase, the burden of debts goes up too. You may have taken a loan to buy a house or set up a business. Repaying these loans can take a toll on your finances and so you must learn how to work your way around it. You can upgrade your life insurance cover when debts are more and once you start reducing the debts, you can revise the insurance cover. This is only possible if you keep revisiting your insurance portfolio from time to time.
Just buying insurance policies is not enough. To be able to meet your financial objectives at various stages of life, you must review your insurance plan regularly. Remember, insurance will work for you only if you make it work for you.
Principal Financial Planner
Optima Money Managers