Reassessing your life insurance portfolioMonday, February 22, 2021
AS you get settled into the new year; vision board done, goals set and plans put into action, it is also the opportune time to start thinking critically about your life insurance portfolio. You may have purchased your policy years ago and have not given it much thought since then, even while you may have experienced several changes during those years — promotion at work, new house, family, marriage; so much can happen after you first take out a n insurance policy.
As you contemplate how you will maximise your financial resources and make the most of 2021 and beyond, there are several reasons re-assessing your life insurance portfolio should be a part of your new year's strategic planning.
Michele Scott, Sagicor Life financial advisor, Corporate Circle Branch, said significant changes in family life, income, career and expenses are important considerations when deciding whether to increase your current coverage or purchase additional policies to protect your financial future. She said understanding these changes can help in adjusting your life insurance coverage and to ensure your insurance policies are still meeting your investments goals. She shares below some key life changes to look for:
Your family life has changed
According to Scott, if you have got married or have had children over the past year or since you acquired your policy, it might be a good time to readjust your portfolio to accommodate the needs of a larger family. You will now need to consider a policy that covers the needs of yourself and spouse, as well as the needs and potential lifestyle and educational needs of your children.
“A lot can change, even in a short time. You will want to ensure that your new family is provided for in any event, and that their future needs are considered in policies suitable for that purpose,” Scott said.
Your income has changed
Scott said it is wise to re-evaluate your portfolio when your income has changed. Noting that experts believe that your life insurance coverage should be a value of at least 10 years' worth of your income, she said getting a new job or a promotion, or starting other ventures which result in more revenue, would create the need for a change in your life insurance plan.
You have new financial obligations
The more financial obligations you take on, such as a new home and mortgage, new debts, a business and in some cases, the care of elderly parents, the more life insurance coverage you may need to purchase.
“You will not want to leave your family with unexpected debts or expenses, especially where you were the primary breadwinner, so it is important to provide coverage for all your current obligations,” Scott said.
Your purpose for getting a policy may have changed
As a person gets older, their reason for getting a life insurance policy may have matured. With life changes, it is expected that the need and purposes of a life insurance policy could change three to five times over a 40-year period. Scott said older persons should review their policies to ensure they are not outliving their coverage.
“Life is so dynamic, and that is very apparent especially in these times, as we continue to see the impact of a life-altering pandemic. Therefore, I always advise my clients to take an annual look back at their portfolio, assess the changes in their life and redefine their financial goals to ensure the best possible coverage for themselves and their loved ones,” she said.
And if you do not yet have a life or critical insurance policy; Scott noted that “now is always the best time to get started”.
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