The importance of revisiting your life insurance….Published: January 22, 2018 by Jennifer Armstrong
Big ‘life events’ that prompt people to buy life insurance are often the same events that should motivate people to review the cover they have in place- but this doesn’t always happen.
Why not take time at the start of 2018 to review your existing arrangements to make sure they are suitable for your current circumstances?
Failing to examine your insurance over time could mean there isn’t enough cover in place to protect your mortgage and your family. Equally it could mean that you’re paying more for your premiums and cheaper options are now available. For example, if you took out cover when you were a smoker but have been a non-smoker for 12 months or more then this should be revisited to ensure you get the advantage of non-smoker premiums.
So, which big life events are we referring to?
You should always make sure the amount and term of your mortgage protection policy is in line with the outstanding balance on your mortgage(s). If you’ve moved house but didn’t revisit the mortgage protection, then there could be a shortfall. Think of it like this; you wouldn’t dream of getting a new car and not updating the insurance. Even more importantly, if getting any sort of cover in place fell by the wayside in the stress of getting a mortgage and moving into the house then you should make it a priority to address this. Maybe you’ve borrowed additional funds but haven’t reflected that additional borrowing in your insurance arrangements? Look at what cover you’ve got and check that it ‘fits’ with the level of borrowings you have.
2. Starting a family
Welcoming your first child in to the world can be a bit overwhelming so its understandable life assurance isn’t at the forefront of your mind! However, it is important to consider what would happen to your family if you weren’t there to pay the bills. Covering the mortgage alone might have sufficed when you were protecting a partner who works but you may wish to have more cover once children arrive on the scene. This will ensure that your loved ones could continue to have a reasonable standard of living if you were to die.
Parents might also wish to consider individual cover because if something happens to one of you, the other still has their cover in place. In effect this provides double the amount of cover for a small additional cost
3. Expanding your family
It’s important to review the level of cover you have in place to make sure there is enough provision to maintain your family’s standard of living. For example, there may now be 2 or 3 kids universities fees to think about.
4. Changing jobs
A promotion or new job may mean you’re able to pay higher premiums and insure more. On the other hand if you’ve been made redundant there is a temptation to cancel any direct debits in order to use the money for living expenses. You shouldn’t cancel any cover without speaking to an adviser. It may be that cheaper cover can be secured and regardless of this having the proper protection arrangements in place should be seen as a priority.
Ask yourself whether any of your loved ones will face financial hardship if you die? It may be that your mortgage is now repaid and you no longer need to protect that commitment but if your spouse is dependent on your retirement income or you give financial help to grown up children or grandchildren then cover may still be required.
The most common reasons stated for not taking up protection are;
-Too expensive (studies repeatedly show that consumers overestimate the price of life insurance) And think of it like this- if you feel you can’t afford it now what would it be like for your dependants if you weren’t here?
-Process takes too long
-Lack of awareness
This is where using a financial adviser really comes into play. If you go onto one of the many comparison sites available without really knowing what you need then the whole process becomes confusing and you may end up paying for cover that is unsuitable. An adviser can identify and evaluate your existing policies, help you prioritise your needs and talk you through and implement the recommendations to make sure the policies you have in place meet your current requirements.