The Buyt Desk
We live in an unpredictable enviornment and thus a life insurance becomes a must have investment. But merely buying insurance is not enough. Since nothing remains same in the life, it is essential to review your insurance policy regularly. Big events like purchasing a home, a child’s education, marriage, and others can impact your finances. Reviewing your insurance policy will help you in ensuring that your beneficiaries will get enough coverage for their future financial responsibility.
The best way to review insurance policies is to create a one-page summary separately for all policies you have. In most plans, you’ll find a page in front of the contract – a declaration page or policy summary. You’ll get most of the required details here to review your insurance.
Basic things to include in your insurance review
Let’s jump ahead over some important things you must include in your summary page for an insurance review.
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Type of insurance plan
Figures out exactly what type of insurance policy you want. For example, auto insurance, health insurance, long-term care insurance, etc. Before you review or summarize an insurance policy, figure out the type of plan you require i.e. universal life, term life, variable life, or whole life.
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Policy number
When you call and ask some crucial questions regarding your insurance policy, you will require to remember your correct policy number.
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Insurance carrier
To know everything about the company that gives the insurance, it is good to track customer service numbers on which you can call or other vital contact details for an insurance agent.
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Date issued
Note down the date on which your insurance policy was issued. Most policies just cover a specific duration. After that, your insurance coverage may lapse or you might have to renew the particular plan. The renewal process might take place automatically if you’ve a bank account linked to your payment. If that would be the case, you must be aware of when you can expect that change.
Understanding the issued date is important as permanent insurance will have a particular surrender charge that would apply once you cancel the plan in starting 5-20 years.
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Insured
Determine who the insurance benefits apply to like you, your dependent kids, or your life partner based on the insurance type.
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Premium required
Keep a complete record of the premium you pay and how frequently it is paid.
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Beneficiary
A person you designate to get the benefits of your policy when you are not there is known as a beneficiary. Many insurance policies like life insurance policies are designed mainly for beneficiaries not highly for the policyholder. If you want, you can change the beneficiary by reaching your insurance company.
How to review life insurance requirements?
Review your life insurance plan at least once a year. Your present policy will possibly remain the same if there have been no big life-changing events over the last 1 year. A yearly review helps in making current coverage changes and analyzing them in the context of your future plans.
Evaluate coverage requirements after big life-changing events
A child’s admission to a college, the birth of a grandchild, and taking care of an ill parent are some life-changing events that could disturb your savings. Your life coverage requires some modifications no matter whether the events in your life produce less or more income.
Keep into account whether to get higher coverage or direct your amount to profitable investments. Immediately inform your financial advisor or an insurance agent about the possible major life change events and determine the effective ways for current life insurance plan modifications to meet your changed financial requirements.
Consider these factors while reviewing your insurance plan
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Financial responsibilities
The financial responsibilities increase with the passage of time. You may have to pay the bills for the healthcare cost of the family, schooling, and education for children, and more expenses. Thus, it is significantly important to extend your life insurance coverage to cover the financial burden.
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Debts
A single and young individual has some big investments. With the flow of time, you might have to take on a mortgage to purchase a house and borrow capital for a business startup. So, it is highly recommended to timely upgrade your insurance policy and add debt cover when borrowings increase.
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Add-ons
Some urgent illness cover and waiver of premium are some add-ons you could keep in your account. If you get a critical ailment, it could be financially damaging.
