LIFE INSURANCE: Why It’s Important
- To cover any outstanding debt
- To help cover costs of a funeral
- To leave a legacy
- Leave money to charity or cause
- To meet financial needs of those left behind
- For general peace of mind
Is it important to review your life insurance policy?
You should regularly consider reviewing your life insurance policy to determine if the coverage in your policy is still appropriate for your situation. You purchase a life insurance policy to protect your family’s financial future and to make sure everything is taken care of for your loved ones in case of your sudden death. But life doesn’t sit still, does it?
A lot of people think that once they buy a life insurance policy they can “buy it and forget it” and doesn’t need to address their future insurance needs. However, a policy that you may have bought 5 years or 10 years ago won’t provide you with the right amount of benefits for your current needs. Experts suggest that you should regularly consider reviewing your life insurance policy to determine if the coverage in your policy is still appropriate for your situation. In fact, most financial advisors recommend reviewing your life insurance policy annually. This becomes important for one simple reason – LIFE CHANGES
Reasons Your Policy Should Change?
Getting married or having a child is one the most important changes that triggers the review of your life insurance policy. Whether you’re having your first child or second, a new addition in the family is one of the biggest changes you can encounter. Considering the change, most of the people will add enough life insurance so that if you die tomorrow, there would be enough funds to provide for your child through their college years. Yet, there are still certain people who continue to live with their existing policy without reviewing it.
Buying your own home may be your family’s largest asset and at the same time the largest financial responsibility. It is suggested to purchase a term life insurance policy for at least the same or more amount as of your mortgage. Then, if you pass away during the ‘term’ when the policy is in force, they can use the money to pay off the mortgage. For instance, if you have a life insurance policy with a death benefit of Rs 1 crore and you buy a new home with a mortgage of Rs 3 crore, you will need to update your life insurance policy.
Over the period of time your income changes for better and it is usually accompanied by changes in financial status of an individual. Whether you get a promotion or hike in salary, all of these call for new financial decisions. Whenever you switch your job or experience a hike in your salary, you must review your life insurance policy as this could help your loved ones to maintain their current lifestyle.
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