Reasons for reviewing your life insurance cover
Life Insurance is a feasible mechanism to ensure the financial sustainability of our near and dear ones. But unlike popular perception, Life Insurance is not meant to be a onetime pathway out of all life threatening problems; it is meant to be modified as per the changes in our circumstances. Whether your Life Insurance coverage is adequate or not will depend on the nature and frequency of life changing events. What are some of these life changing events?
Change in Marital Status: Your Life Insurance coverage needs a change if you are getting married or divorced. Change in family members, absence or presence of a spouse, financial dependence/independence of spouse are various factors which impact the insurance amount required.
Whether your spouse is financially dependent on you or not is a key factor to take into consideration while reviewing your insurance policy. If you are getting divorced, be sure to change your beneficiaries and you might not need as much Life Insurance coverage as before.
Parenthood: Birth of a child in a family is a huge change that can overwhelm anyone. Becoming a parent comes with massive responsibilities. You need to provide for your children until they become financially independent. You need to ask yourself certain questions to safeguard your child’s future. Who will provide for your child in case of your untimely death?
It is recommended that you review your Life Insurance policy every time you have a child. With the birth of children, comes significant financial implications, such as paying for expensive education (high college tuition fee) and healthcare. Whether you give birth to a child or adopt one, you need to ensure you have enough to take care of the new addition to your family.
Ownership of property: Owning a residential property comes with a mortgage. If you are buying a new house or moving to a larger/better house, you will probably need more Life Insurance coverage for the higher mortgage. You need to check if your coverage amount is sufficient enough to pay off the mortgage. On the contrary, you may have paid off your mortgage and will consequently need less Life Insurance coverage.
Change in Career: If you get a new well-paying job or a promotion, you might see a rise in your standard of living. Higher standard of living means higher insurance coverage. On the contrary, losing a job can mean reducing your Life Insurance coverage or reviewing the Group Insurance policy that your job had provided. Job loss also means that you can go for an affordable Term Insurance plan like ICICI Pru’s Term Insurance Plan. Term Life Insurance plan is a relatively low cost temporary coverage. If you have changed a job, which was considered risky or dangerous, you need to review your insurance policy as insurance companies charge higher premiums if you have a risky career. If you no longer have a risky and dangerous job, insurance companies may be willing to allow for a lower premium.
Developing or healing health issues: The status of your health affects Life Insurance rates. Insurance companies generally provide discounted rates of insurance policy if your health improves significantly. You might have been on a health regime, exercising and eating healthy and that might have paid off leading to a decrease in blood pressure or cholesterol. You might have lost weight or have quit smoking and hence, become eligible for lower rates. Insurance companies might decrease the rates if you can show that your health is now an asset and no longer a liability. On the contrary, if your health deteriorates, you do not need to worry, if you already have Life Insurance. It is important to get Life Insurance coverage as early as possible to secure your medical treatment.
You need to make sure that you are entering into an agreement with a company whose terms and conditions prove that they are providing you a reliable Life Insurance coverage. Check in with your insurance company regularly whenever there is a significant change in your life to know whether they can offer you a revised premium. To be able to carefully judge whether you are going for a reliable Life Insurance or not, do check the financial stability and ratings of the Life Insurance company. If you have a reliable Life Insurance policy and you check your insurance policy regularly, there is a good chance that your financial viability is secured.
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