It’s almost the middle of the year already and you have updated your short-term insurance policies. Now it’s time to turn your attention to your long-term assurance, which includes your life insurance policies, dread disease cover and income protection policy.
Ideally, you should review these policies on an annual basis to take into account any changes or life events that may have occurred in the last year. Speak to your insurer to discuss whether these events require any changes to your long term assurance. Some of the events that could change your requirements are:
Life insurance, dread disease cover and disability insurance: If you have lost a significant amount of weight or have stopped smoking in the past year, notify your insurer so that they can reassess your risk and possibly adjust the premium on your life insurance policy. An improvement in your health will also positively impact your dread disease insurance needs and premiums as well as your disability insurance because you are a reduced risk to the insurer.
Life insurance, income protection and retirement savings: Your needs will change as you now have a spouse or dependant who will be financially impacted if you die. This means you will have to change the beneficiary on your life insurance policy, if you already have one or you will need to take out a new life insurance policy. You will also have to update the beneficiary on your income protection policy and your retirement savings products.
Buying a home
Life insurance: If you buy a property, you should consider taking out a life insurance policy, to cover the home loan debt if you die so that your family doesn’t have to sell the property to settle the debt. Banks will also offer you a mortgage protection policy but this policy offers decreasing cover as you pay off your bond and at the end of the home loan, the mortgage protection cover simply falls away. A life insurance policy on the other hand, will cover the bond if required and will still pay out to your beneficiaries if the bond has been paid off.
Having a baby
Life insurance: A baby is exciting but also means that there is someone who is completely dependent on you. Review your life insurance so that you know that your child or children will be financially provided for if you die. When making calculations, you may want to factor in the cost of their education if you die while they are still young.
Getting a raise
Income protection and disability insurance: This doesn’t have to be an extraordinary event. Even a standard across-the-board salary increase of seven percent can impact your income protection needs. This means that any disability insurance or income protection policies that you have need to be updated.
Life insurance, income protection and retirement savings: Just as when you got married, getting a divorce requires a change of beneficiary on your life insurance and income protection policy, your retirement savings products and a change to your will. You are allowed a “grace period” of three months to change your will. That is, if you die within three months of your divorce, then your ex-spouse does not inherit as per your will. However, if your death occurs well after three months from the date of your divorce and you have not updated your will, then your ex-spouse could stand to benefit – to the detriment of your new spouse, if you have one.