“I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.” Jimmy Dean
You can’t change the life events happening to you but you can change the life insurance appropriate with the life events.
The investments in the Life Insurance Policies are not a one-time event. Your need for life insurance cover changes every few years. If you ignore reviewing your life insurance need, chances are that you might remain inadequately covered or you might miss on some important features.
There are 6 reasons you need to review your life Insurance policies and requirements periodically.
1) Life Events
Important life events have an impact on your need for Life Insurance. Life events like your marriage, the birth of a child, availing any kinds of loan, changes in your lifestyle for the better.
Your marriage and then childbirth increase your responsibilities. Depended on your income increase. You need a higher cover.
Evaluate your life events and their impact on your future financial risks and responsibilities.
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2) Beneficiaries Changes
This is very important. You might have your spouse as a beneficiary. In the event of her death, you need to change the beneficiary. You might also need to review beneficiary in the event of your divorce. Of course, you also need to review when you marry or remarry.
Likewise, the marriage of the child or birth of grandchildren all such important events requires you to evaluate who would be the beneficiary of your life insurance money. Ask yourself;
- Who are your named beneficiaries?
- Are your beneficiaries still the people who you would like to benefit from your life policy?
You may wish to change the name of the beneficiary as the life unfolds. Don’t ignore this.
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3) Additional Features
Every now and then life insurance companies come with new features. Your existing plans might not give you such additional features. These are important features and add value to your life insurance risk management plan.
Periodic evaluation of features available in the market will help you to plug the gap if any with your existing plans.
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4) Fund Performance:
ULIP plans are market-linked plans. In these plans, fund performance plays an important role. How your selected fund is performing decides your return on the policy.
Insurance companies offer a choice of a few funds to the investors. An investor can switch the fund based on his risk appetite or based on the performance of the plan.
Reviewing the performance of the fund is necessary for ULIP Plans.
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5) Income Changes:
Over the period of time your income level changes for the better. Your lifestyle also changes. You need to review your life insurance policies to make it suitable for your income level.
In case of the demise of the insured. The family members shall be able to sustain a higher level of lifestyle.
This requires regular evaluation of the life cover. Inadequate insurance cover is a universal truth. You can escape this by periodic and realistic evaluation.
6) Health Changes
Changes in health require a change in life insurance investments. The deteriorating health of the earning member requires a higher cover.
An insurance policy with a health condition is a challenge, however with some higher premium a person with most of the initial stage diseases/disorder can have life insurance policy.
What to Review:
Consider all debts, all financial responsibilities, and sustenance of the level of the lifestyle of the survivors. Consider any special needs to take care of.
Reconsider and update the beneficiaries if required.
It is important to have an annual review of your life insurance needs. Any gaps in the needs and the existing policies have to be plugged. Most people buy life insurance, pay their premiums and simply forget the issue. This is a mistake.
In a changing family and financial equation, Life Insurance policies need your continual reviews.
“Hope always deceives us when it becomes a substitute for action.” Marty Rubin
Yes, don’t hope all is well, take action and keep your financial portfolio and insurance policies in tune with the changing time.
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