5 Essential Tips for Reviewing Your Life Insurance Policy Annually

Regularly reviewing your life insurance policy ensures it continues to meet your needs and adapts to any life changes. This blog will provide essential tips for conducting an annual review of your life insurance policy. Our aim is to help you make informed decisions and maintain adequate coverage.

In this article:

• How Can You Determine the Right Amount of Coverage for Your Needs?
• Evaluate Your Coverage Needs
• Review Your Beneficiaries
• Check Policy Riders and Options
• Compare Premiums and Policy Terms
• Consult with an Insurance Professional
• How Do You Balance Life Insurance with Other Financial Priorities?
• Frequently Asked Questions (FAQs) about Reviewing Your Life Insurance Policy

How Can You Determine the Right Amount of Coverage for Your Needs?

Before diving into the tips, It’s important to answer this question to understand the factors involved in determining proper coverage.

To find out how much life insurance you need, start by looking at your current financial responsibilities i.e. your debts, like mortgages, car loans, and credit card balances. Also, think about future costs such as your children’s college tuition.

Then, consider how much income your family would require if you weren’t there to provide for them. Look at your annual salary and decide how many years your family would need this income to stay financially stable. This helps ensure they can cover everyday expenses and any unexpected bills.

Reflect on major life events that could change your insurance needs. Getting married, having kids, or buying a house usually means you need more coverage.

Take a look at your policy’s additional benefits or riders. Make sure they still fit your situation. For instance, if someone in your family has developed a medical condition, a critical illness rider might be useful.

Regularly check your premiums and policy terms to ensure they’re still affordable and meet your needs. If premiums have gone up a lot, consider adjusting your policy or looking for a more budget-friendly option.

inFinally, talk to an insurance professional. They can give you tailored advice and help you choose the best policy for your needs. By keeping your policy up to date, you can ensure your family is always protected.

Tip #1 Evaluate Your Coverage Needs

Life changes such as marriage, the birth of a child, or buying a home can significantly impact your life insurance needs. Evaluate these changes to determine if your current coverage is still sufficient.

• Marriage: Getting married increases your financial responsibility. Naming your spouse as a beneficiary will ensure that they are taken good care of in case you pass away. This step is important to secure their financial future.
• Childbirth: The arrival of a child is always a happy occasion and at the same time, increases the financial burden. Increasing your coverage ensures that your new dependents are taken care of as they mature.
• Home Purchase: Owning a home requires significant financial investment. Re-evaluating your insurance to cover your mortgage eliminates worries about a place to live should something happen to you.
• Re-Evaluate Financial Responsibilities: Life transitions tend to be accompanied by new financial responsibilities. Recalculate these so you adequately cover all debts, future expenditures, and income replacement needs. Modify the amount of coverage to fully protect your beneficiaries. 

Example:

• Marriage: Add your spouse as a beneficiary.
• Birth of a Child: You will have to increase the coverage to provide for new dependents.
• Home Purchase: Your coverage should be sufficient to pay off the mortgage.

Regularly reviewing and updating your life insurance policy with these changes in life is a good way to make sure you never have coverage that lags behind your needs. This proactive approach helps secure your family in times of need, regardless of the changes.

Tip #2 Review Your Beneficiaries

It’s important to ensure your beneficiary designations are current and reflect your wishes. Life events such as divorce or the birth of a child may cause changes to your beneficiaries. Keeping this information up-to-date guarantees that your life insurance benefits go to the right people.

For example:

• New Dependents: You should add new children as your beneficiaries to keep them financially secure.
• Remove an Ex-Spouse: Change your policy to include changes in marital status.
• Ensuring All Intended Beneficiaries are Included: Designations have to be checked on a routine basis to ensure that everyone you want to include is listed. 

Contact information for beneficiaries needs to be confirmed so that it is correct. This process is essential so that in case of a claim, there are no complications. Having correct contact information ensures that the benefits are instant and smooth.

Tip #3 Check Policy Riders and Options

Review any attached riders that may have been added as part of your policy to ensure that they also continue to meet your needs. Riders are considered added benefits like waiver of premium, accidental death, or long-term care. They may need changes based on changes in life. Keeping these riders relevant ensures you are not paying for unnecessary coverage.

Example:

• Critical Illness Rider: With changes in family medical history, you should be looking at being able to add a rider in the future for critical illnesses that may impact you.
• Get Rid of Unneeded Riders: Eliminate those riders that serve no use because they tack on the premium amount.

Ask your insurance company about new riders which could benefit or protect you better. This approach can help tailor your policy to better fit your current and future needs. Keeping up with policy riders by periodically reviewing and updating them will ensure you have the most relevant and beneficial coverage.

Tip #4 Compare Premiums and Policy Terms

Check if there are any changes in your premiums and make sure that they remain within your budget. If the premiums have increased significantly, look for any possibilities of changing your policy or moving to a different provider with lower premiums. Keeping your premiums manageable helps maintain your financial stability.

Example:

• Make Adjustments to Your Policy: Reduce the amount of coverage or remove unnecessary riders to save money.
• Switch Companies: Shop around with multiple insurance companies to get a better rate.

Knowing the differences in changes of your policy terms such as coverage limits or exclusions to see if they align with your needs. This way, you end up with a policy that suits you and meets your expectations. By regularly comparing premiums and reviewing policy terms, your life insurance stays affordable and continues to provide you with the coverage you need to rest easy and feel financially secure.

Tip #5 Consult with an Insurance Professional

See your insurance agent or financial adviser annually to go over any changes in your life, financial objectives, and coverage requirements. Frequent check-ins help to ensure your policy is current and fit for your present circumstances.

Example:

• Talking about new insurance products: Look at ones that might have reduced rates or better coverage.
• Reviewing Financial Health:  Examining financial health and ratings of your present insurance provider helps you maintain reliability.

Annually consulting an insurance professional guarantees that your life insurance policy is important for financial protection tailored to your changing requirements and peace of mind.

How Do You Balance Life Insurance with Other Financial Priorities?

To balance life insurance with other financial priorities, start simple, make a budget that includes all expenses and financial goals. You can then identify where you can cut back to free up funds for life insurance. Prioritize essential expenses first, and then consider how life insurance fits into your overall plan. Opt for a policy that provides coverage without straining your budget, such as term life insurance for its affordability. Make sure to review and adjust your financial goals as your income and expenses change. 

Frequently asked questions (FAQs) about Reviewing Your Life Insurance Policy

Find a solution for what you’re looking for 

Regularly reviewing and updating your life insurance policy with these easy tips will ensure you have the right coverage to protect your loved ones and meet your financial goals. At Protect Your Wealth, we work with and compare policies and quotes from the best life insurance companies in Canada to ensure the best solution for you and your needs. We provide expert life insurance solutions, including no medical life insurance, critical illness insurance, term life insurance, and permanent life insurance to build the best package to give you the protection you need.

Contact Protect Your Wealth or call us at 1-877-654-6119 to talk to an advisor today! We’re proudly based out of Hamilton, and service clients anywhere in Ontario, British Columbia, Alberta, and Manitoba including areas such as Kitchener, Calgary, Surrey, and Winnipeg.