5 Reasons to Review Your Life Insurance Cover Every Year

As this financial year draws to a close, you will no doubt be ready to review your finances and perform a quick assessment of your portfolio. And insurance, as it turns out, is a very important part of your financial portfolio. This is why you need to review your insurance cover at many of the pivotal points in life, such as the day you get married, the day you have your first child, the day you perhaps have another child, and even the day you retire.

In between all of these key milestones, it certainly helps if you perform an annual review of your insurance cover each year. And what better time to do this than now, as the end of the fiscal year 2021-22 fast approaches.

If you're still on the fence about this, here are 5 reasons to review your insurance cover before the fiscal year comes to an end.

Inadequate insurance coverage can cost your family a great deal. Without sufficient financial safety, the dependent members of your family may find it very challenging to cope with their everyday needs in case something untoward happens to the earning member (or members) of the family.

So, one of the primary reasons you need to review your life insurance coverage periodically is to ensure that you are adequately covered. In case your existing life cover is not sufficient to meet your family’s daily needs and help them maintain the standard of living they are accustomed to, you can expand your life cover by purchasing another life insurance policy as needed. Keep in mind that your life cover should also be enough to allow your family to meet their life goals in your absence.

In the past fiscal year, you may have checked off a major milestone in life. Perhaps you may have gotten married, in which case you need to ensure that your life insurance cover is capable of protecting your spouse financially in your absence.

Or perhaps, you may have had your first child (or a second or a third, depending on your existing family situation). In this case, you may need to take on an additional life insurance policy to ensure that the new members in your family are also adequately protected.

Another major milestone that warrants an insurance review is when you take on any significant debt, such as a housing loan or a personal loan. In case your life cover is not enough to cover these debts, it is a smart idea to expand your coverage to ensure that your family is not burdened by your financial liabilities.

You may have initially purchased a term life insurance policy like the ABSLI DigiShield Plan because it is affordable and offers a significant life cover. When you are just starting out with your career, it makes more sense to purchase a pure life cover. However, as you advance in your career, your income levels will most certainly rise. This naturally increases your purchasing power.

So, in case your income has seen a boost in the past year, it may be the right time to expand your life insurance portfolio and include a savings plan like the ABSLI Assured Savings Plan to enjoy maturity benefits when you attain the age of 50 or 60. Alternatively, you could also consider investing in a Unit Linked Insurance Plan (ULIP) to create wealth over the long term.

Each year, the insurance industry continues to evolve by leaps and bounds. Today, you can enjoy many new-age features such as whole life coverage up to the age of 99, coverage for modern medical treatments, international coverage and even the option to switch funds in ULIPs as per your changing needs and goals.

If you had purchased your existing life insurance plan early in life, you may not have the benefit of these modern features. But by reviewing your insurance portfolio before the end of the fiscal year, you will be able to take advantage of these new-age benefits before the year comes to a close.

Performing an annual insurance review also makes it possible for you to assess if your existing coverage aligns with your life goals. For instance, if you have purchased a retirement plan, you can check if your life cover is sufficient to meet your retirement needs and the requirements of your spouse post retirement.

Alternatively, if you have bought a Unit Linked Insurance Plan (ULIP), you need to ensure that your ULIP fund portfolio aligns with your changing life goals and your changing risk profile. Reviewing your insurance cover annually can help you ensure that all these boxes are checked promptly.

See how there may be many important reasons to review your insurance cover periodically each year? It takes just a few minutes of your time, but the benefits this little financial exercise gives you last a lifetime! So, take some time off this month to assess and run a quick eye over your insurance coverage. If you find it lacking in any area, you have the whole of next month to upgrade your cover as needed.

Read next: LIFE INSURANCE RIDERS YOU CAN CONSIDER

Planning to increase your existing insurance cover with a new life insurance plan? Why not enhance the additional protection with appropriate add-on riders? We have a blog that outlines all the essential life insurance riders that you can consider.

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