When it comes to reviewing your household insurance policies, such as car or home insurance you probably do it at least once a year, right?
When the annual renewal notice comes in, one of the simplest – and most sensible – options is to pop your details into a comparison site, making sure you note any changes in circumstances that may have occurred in the past year. This way you can compare lots of different policies to see if you could switch to one that will save you money on your annual premium.
If you make this a common practice with your other insurance policies, then why aren’t you doing the same with your life insurance?
With car and home insurance policies lasting for just 12 months, you’ll get a renewal notice each year so it’s a no-brainer to review this whenever you receive your letter.
Life Insurance policies tend to last for around 20-30 years so it’s understandable that it may not be something you think about on a day to day basis and if you want to keep on top of it you’ll need to be more self-disciplined about reviewing your policy.
For most people, life changes frequently and therefore it’s advisable to review your life insurance coverage on a regular basis, in the same way that you would with your other policies.
There may be years that pass where nothing much has changed, and the cover that you have is adequate – even so, it’s still worth knowing for sure!
However, there may be other times when you have some major life changes which could affect your financial future, so you’ll want to make sure that the cover you have in place is still suitable.
Events which will require a reassessment of your life insurance needs include:
In all the above cases you should be able to plan ahead and make changes to your life insurance accordingly but don’t forget about events which may occur unexpectedly, such as losing your job or having to care for a sick relative.
Any of these life events could use up a substantial amount of your savings and could alter the amount of cover needed compared to when you first took out your policy. By taking a stock take of your life on a regular basis, you can easily prepare for these changes, or in the case of unexpected events, you’d be wise to conduct a review of your insurance cover as soon as possible making sure that you have adequate cover for the change in your circumstances.
& Read more in our guide ‘How much Life Insurance do I Need?’
What exactly do you need to consider?
There are two main things to consider when it comes to reviewing how much cover you currently need.
Firstly, you’ll need to look at how much debt you have – over time it may increase or decrease so you should try to keep on top of it to make sure you’re not underinsuring yourself or paying over the odds for cover that you don’t really need.
Secondly, make sure you are aware of all your financial responsibilities, not just currently, but consider what you may need to supply income for in the future if you aren’t around.
If you have children, you may think that it’s enough to cover current childcare costs, but it’s also worth considering future costs that may be incurred such as university tuition fees or even learning to drive.
Covering large debts (mortgage for example) so that your family don’t have to face the burden of this should be your main concern, but if you can afford to do so, it’s may be worth looking at extending your coverage enough to provide your family with a lump sum which will cover additional expenses as they learn to adjust to life without the main wage earner or a second income.
If you aren’t sure whether your life insurance policy is still suitable for your family’s needs then it’s a good idea to speak to your insurance provider or to a life insurance specialist. This way you can discuss any changes to your circumstances and enable you to work out just how much coverage you need.
Don’t have life insurance at all? Then perhaps now is a good a time as any to review whether it’s an essential requirement or not?
Our trained expert advisers have access to the UK’s leading lenders and using their knowledge and skills will place you with the most suitable leader and product for your needs.