Why You Should Review Your Life Insurance Plan?

Life insurance is not merely just about securing a financial cushion for your dear family members when you are no longer around. It is a safeguard for the future, that even in your absence, your family's dreams will not be shattered. Right from paying off debts, funding your kids’ education, or ensuring a comfortable life, life insurance stands tall as a shield against uncertainties.
But as your life evolves, you also face career advancements, your family grows, financial circumstances change, it is crucial to ensure your coverage keeps pace. This is why a periodic review of your life insurance policy is essential, ensuring it aligns with your current needs and aspirations. In this article, we will delve into why it is essential to review your life insurance policy annually and learn how to adopt and adjust the life insurance coverage to enable better protection for your family's future and bring you closer to your life goals.

Why Should You Review Your Life Insurance?

There are a few key reasons why it is important to review your life insurance plan –

1. Changes In Your Finances
   As mentioned earlier, your financial situation can shift over time due to life events like getting married, having kids, getting a promotion, or changes in income. By reviewing your life insurance plan, you can ensure it still meets your needs.

2. Changes In Your Family
   Life constantly changes and your family evolves over time along with it. Whether it is welcoming a new member by getting married or birthing your child, going through an unfortunate divorce, or coping with the loss of a loved one, such life events can call for change in your nominee designation and how much coverage they need. Reviewing your plan ensures that you keep up with your family's evolving needs and provides the support they deserve.

3. Changes In Life Phases
   Life is a journey filled with big moments like buying a home, sending kids off to college, planning for retirement, etc. Each milestone can change your financial goals and requirements. By reviewing your life insurance plan, you can make sure it is still on track to support you through these milestones and help you reach your goals.

4. Changes In Policy Performance
   Reviewing your life insurance plan gives you a chance to evaluate its performance. You can look at various factors like your investment returns, accumulation of cash value, and bonuses. Understanding how your policy is performing helps you decide if it is still the right fit for your financial commitments.

5. Changes In Beneficiary Designations
   Life keeps moving ahead, and this means that your beneficiary designations may also change. Regularly reviewing and thereby updating your beneficiaries ensures that your policy's proceeds go where you want them to.

6. Policy Expiry
   When your life insurance policy approaches its expiry or renewal date, it is time to take a close look at your options. By reviewing your coverage ahead of time, you can decide whether to buy a new plan or explore other insurance solutions. This proactive approach will help you steer clear of coverage gaps and keep your loved ones protected without interruption.

7. Peace Of Mind
   Checking your life insurance plan regularly gives you peace of mind. You will feel better knowing that your loved ones are well taken care of and that your policy still matches up with your financial needs. It ensures that everything is on track and your family's future is secure.

Life Insurance Policy Review Checklist

Let's go through a checklist to make sure your life insurance policy is in good shape –

• Policy Details
  Take a look at your policy document. Check out things like the cover amount, policy duration, premium payment schedule, nominee details and any other important information.

• Coverage Needs
  Think about whether the coverage you have is enough to handle your family's needs now and in the future. It is about ensuring there are sufficient resources to manage things if something unforeseen happens to you.

• Beneficiary Designations
  Make sure the people you have chosen to get the claim amount from your policy are still the right ones. If there are changes in your life, such as getting married, it may be necessary to update the beneficiaries of your life insurance policy.

• Premium Payments
  Check your payment history to make sure you have been keeping up with your premiums. Keeping them up-to-date helps avoid policy lapses.

• Policy Performance
  Analyse and study the investment components linked to your policy are performing and compare achieved returns with your anticipated outcomes.

• Legal And Tax Implications
  Keep an eye out for any changes in tax laws or rules that could affect your policy. If anything seems tricky, it is smart to talk to a tax expert or a legal professional.

• Review Schedule
  Decide how often you want to review your policy. It could be on an annual basis or every few years - whichever aligns best with your objectives and preferences.

• Expert Advice
  It is a good idea to talk to a financial advisor or insurance expert to make sure your policy keeps up with your changing needs and goals.

To conclude,

Although purchasing the policy initially offers a sense of security, conducting regular reviews ensures that the coverage remains appropriate and adequate for your family’s evolving needs. You can use the checklist above to reassure yourself that your policy is headed on the right path. So, take out some time each year to check in on your policy. It is a small step that can make a big difference in providing peace of mind and financial protection for those you care about most.