It is common knowledge that buying life insurance is important. However, getting the right coverage at all stages of life is just as important. Sadly, people buy their life plans and forget about it. They continue with the same cover for years and decades and that proves to be futile after a while. Do you have a life cover you haven't evaluated in a while? If yes, then drop everything else and re-evaluate your life insurance policy today! Listed below are some handy guidelines to make the job simpler for you.
Re-evaluate the Volume of Cover
First and foremost, you need to re-evaluate the value of your life cover. This is the single most important component of any life insurance plan and you need to ensure you have the correct coverage amount. You may have bought your life insurance plan ten years back. At that time, you were a newly-married person living with your spouse in a small house. Today, you are a father of twin kids and you have all shifted to a much larger apartment located at the centre of the city. You need to re-evaluate your life insurance cover to ensure your family can have the highest protection if you die so that they can pay their bills and continue with the same lifestyle. You also need to factor in expenses such as your kids’ higher education costs, the home loan that is active, etc and arrive at a sum assured that is large enough to accommodate all this.
Re-evaluate Your List of Nominees
Someone who bought a life insurance plan two decades ago may have nominated his mother and his 5-year-old son as the beneficiaries of the life cover. Today, his mother has passed away and his son is a successful entrepreneur who is financially independent. It is thus important for people to re-evaluate the list of nominees and see who needs the protection the most. In the illustration above, the policyholder re-evaluated his nominee list and nominated his wife as the sole beneficiary as she is now the only dependent family member the policyholder has.
Re-evaluate Your Salary and Lifestyle
With time, you climb up the career ladder and your salary rises too. You have a better and more improved lifestyle. Your spending pattern changes. After your demise, your family should receive a sum assured that can support their current lifestyle. If you had bought the term insurance plan when you were a struggling fresher with a salary of INR 20,000, you need to reevaluate it. Make sure it is suitable for the current needs of your family. Similarly, if you had invested in a ULIP, you can change the funds or add more money so that your wealth grows even further.
Re-evaluate the Type of Policy
Many youngsters, or people on a tight budget, opt for the term insurance plans. These are no-frill life plans that offer a pure life cover. If you are now financially stronger, you can consider upgrading your term plan for a whole life plan. If your kids have grown up and you have met your financial milestones, you can even surrender your term plan and opt for something like an immediate annuity plan. Re-evaluate the type of cover to ensure you gave the most effective life insurance policy that would deliver if needed.
Re-evaluate the Need to Continue with the Cover
And finally, reevaluate your life insurance plan to see if you need it anymore or not. As stated, if you have retired and your kids have grown up, continuing with a term life cover may not be of much use. Similarly, if you have made numerous investments in the financial markets and earn heavy dividends from them, investing in a ULIP may be futile. If you feel your life insurance policy is of no good use any longer, and you have a better financial cushion, you may consider surrendering your policy. If you receive a cash value, invest it in health insurance or in an annuity fund so that your money is utilised properly.
You have many options after you re-evaluate. You can either inform your insurance provider and make the required changes or you can buy a separate policy and increase the scope of cover. You can also cancel a policy that's redundant and get a fresh cover altogether. Life insurance needs are person-specific, so you need to see what your requirements are and then make the necessary alterations.
Conclusion
Once you carry out these checks, you will be able to have the most suitable life cover at all times. Different people go through all different life stages and their needs and requirements also change accordingly. You also face this and that is precisely why you need to take a new and fresh look at your life insurance policy every few years. Keep the points mentioned above in mind and you would be able to do so without any issues whatsoever.
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