If you’ve had the same life insurance policy for a while, chances are that your needs have radically changed. Update your policy to avoid coverage gaps or overpaying for a policy you don’t need.
Why is it a good idea to review my life insurance?
As you go through life, your insurance needs change. Updating your policy regularly can help make sure you’re not exposed to gaps in coverage or overpaying for coverage you don’t need.
Reviewing your policy can also help you take advantage of competition in the insurance market and new improvements to insurance policies. For example, new medical advancements and competition among insurers has made it easier get coverage for pre-existing conditions at a fair price.
When should I review my life insurance policy?
Consider reviewing your policy:
- When starting a new relationship or ending an old one. If you get married or divorced, it can affect how much coverage you need, who your beneficiary is and whether you’re eligible to take out a joint policy with your spouse.
- After having a child. The addition of a child to a family can make a huge difference to the family finances. The additional mouth to feed should be reflected in the amount of coverage you have.
- If you take on additional financial commitments. Taking on credit card debt, a mortgage or car loan or another other new financial commitment may require you to increase the amount of coverage you have.
- After getting a raise or promotion. The amount of income you’re bringing in may have changed significantly since the time you took out your life insurance plan initially. If your current lifestyle and financial obligations depends on a higher income than the one you had when taking out your policy, you may need to re-evaluate your coverage needs.
- When your debts are paid off. Your insurance needs will decrease as when your debts are repaid and there will be less financial commitments to meet in the future.
- If you need to name a new beneficiary. If the main beneficiary of your life insurance policy has actually passed away or is no longer in your life, or if you need to add an additional beneficiary, you’ll need to update your policy.
- If your health has improved. If you’ve lost weight, stopped smoking, gotten a pre-existing condition under control or improved your health in any other way, you may be able to get lower premiums.
- Have a policy that’s about to expire. If your policy is about to expire, give it a quick review and consider comparing different brands, even if nothing important has changed in your life.
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How do I review my policy?
Your goal when reviewing your life insurance is to ensure that you maintain enough coverage without overpaying. To start:
- Consider your personal circumstances. As you review your policy, consider your age, your lifestyle, your health, your status and your income, and how any or all of these have changed since you first applied for your life insurance.
- Review your amount of coverage. Decide if you need to add or cut any coverage from your policy.
- Review the type of coverage. For example, if you retired, you may not need income protection insurance. But if you’re still in the workforce and your family depends on your income, it might be a good idea.
- Compare options. Compare policies with the new amount and types of insurance you need to find out if your current insurer is still the right choice. If it is, contact your insurer to update your policy. If not, switch to a new policy.
What information about my policy can I get from my insurer?
Ask your insurer for a policy summary. A policy summary is a one-page document that contains:
- The basics of the policy
- The amount of coverage
- The benefits of the policy
- Any restrictions on the policy
Most insurers can send you a policy summary if you don’t already have one, but in some cases you may need to review your full policy.
How to make changes to your life insurance policy
If you’ve reviewed your life insurance policy and found that changes need to be made to reflect your new circumstances, you can contact your insurer to change:
- The beneficiaries. Check that any changes are made correctly and all names are properly spelled to ensure that everything is legally binding.
- Your personal details. The basic information in your life insurance policy needs to be current at all times. If you change your name, phone number or address, contact your insurer to update your policy. Always check carefully to ensure that all details have been entered correctly by your insurance agent and that you have any spelling errors corrected.
- Coverage amount. Note that some insurers will require a medical exam if you want to change the amount or type of coverage you have. Talk with your insurer to find out more.
- Insurers. You’ll need to get in contact with both your new insurer and your existing insurer to make sure the process goes smoothly. Before cancelling your current policy, take any necessary medical exams and get accepted by your new insurer.
Ask for a copy of any new documents, including your updated policy that includes the changes. And to make things run smoothly, have your policy number handy before you call.
To get the best deal and the right amount and types of coverage, you’ll need to review your life insurance policy regularly as your life changes. And to take advantage of the competitive market, compare life insurance companies to make sure you’re getting the best deal before updating or renewing your policy.
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