5 reasons why you must review your insurance portfolio

You’ve got yourself and your family covered by insurance, both life and medical. So, do you sit back and relax in the knowledge of the security you have? Or do you periodically review your coverage to make sure that your savings plan is adequate? The latter seems to be the wiser course of action to us. Here are five reasons why.

1. The rising cost of healthcare: Healthcare gets more expensive every year, and it far outstrips inflation. Therefore, what seemed like adequate medical cover a few years ago will most probably not be enough now, or will feel inadequate in a few years from now. In addition, you might want to prioritise different things at different stages of your life with the help of add-ons on your insurance policy. Anyone approaching retirement can benefit from add-ons that cover critical illnesses like cardiac disease, stroke, cancer, or kidney failure. In light of the current pandemic, clauses that allow healthcare at home will offer much greater flexibility for you as a patient and subscriber.

 

2. Change in health or wellness: Insurance companies usually ask you to undergo a series of tests before issuing an insurance policy. If you don’t meet the health parameters, the policy premium is accordingly increased to account for the higher risk that you carry. For example, if you are overweight or a smoker, your medical insurance premium will be significantly higher than that of a non-smoker with a healthy weight. However, if you give up smoking or lose weight, it is entirely possible for the insurance company to lower the premium to reflect your healthier lifestyle. You’ll have to check with your medical insurance provider for the exact steps or shop around for a provider who will consider your improved health while setting premiums during policy renewal. Examining the other side of the coin, you might want to invest in disability insurance if you start working in a high-risk environment like construction or on a factory floor. Disability insurance makes sure that you don’t lose out on a monthly income, should you ever be incapacitated, losing the ability to continue working in your chosen field.

 

3. If you have a house loan: Buying a house is usually a near-lifelong commitment. Should something untoward happen to you, it will leave your family with the responsibility of repaying the house loan. Not only will this put sudden financial responsibility on your family, but the worst-case scenario is repossession of the property by the lender if your family cannot pay the EMIs. This is something you will never wish for them. To safeguard against this, make sure your life insurance offers a payout greater than the sum of all your debts. This will mean reconsidering your life insurance policies when you take a house loan and reviewing those policies every 5-10 years if needed as the house loan amount goes down. It is also relevant if you’ve taken a loan of a significant amount for any other purpose, like starting a business. Essentially, your family should not be left with the responsibility of clearing your debts while dealing with the shock and grief of your death.

 

4. Because you’ve had a change of lifestyle: This covers many situations. A few are:
   
   

   • You’ve received a promotion or had a change in employment, and your salary and assets have increased.

   • You move into a new house or renovate the old one and need better homeowner’s coverage for your residence.

   • You have a child.
     
     

   These are things that will need you to increase your coverage, which means larger premiums for a larger return or more coverage.Therefore, it makes sense to cut down on your expenditure and invest in a money-saving plan to reflect your change in lifestyle.
   
   

5. A change in your goals for your children: As seen in the previous point, a change in goals might warrant either more or less insurance. For example, if your children opt for a more expensive course for higher studies, you’ll need to invest in a savings insurance policy. Conversely, when your children become financially independent and don’t need your financial support anymore, you can opt for a plan with a lower premium.

Reviewing your insurance portfolio isn’t as difficult as you’d imagine it might be. If you already have a clear savings plan in place, you can simply tweak your plan to suit your new situation. There are a few basic things that you can track across your insurance policies. These include what the premiums are, how often you need to pay them, whether they offer you tax* benefits, what the term length is, and who the beneficiaries are. If you review your savings plan every few years, you can make the necessary changes like adding or removing beneficiaries, changing the term length to suit your changed financial plans, etc. Reviewing your insurance portfolio every five years or so will help you keep up with your changing requirements and the new offerings and trends in the market.

Tata AIA Life Insurance offers a range of life insurance products to provide for all kinds of insurance seekers:

1. Term Insurance plans for pure protection and affordable term life cover.

2. Savings solutions for the dual benefit of life cover and guaranteed¹ returns on investments.

3. Wealth solutions for life cover, along with market-linked investment returns.

4. Retirement solutions to make the later innings of your life financially secured.