Marriage, having a child and retirement are just some of the life events that can have a profound effect on life insurance needs. So an annual New Year’s coverage review is always a good idea, according to the Insurance Information Institute (I.I.I.).
“One of the best ways to start the new year off on a firm financial footing is to make sure that your insurance coverage is up-to-date,” said Jeanne M. Salvatore, senior vice president of I.I.I. “A major change in your life such as retirement, adopting a child, investing in a major purchase or moving can have a profound influence on your insurance needs. Take the time to discuss these changes with your Insurance Professional so that you and your loved ones are financially protected. You may even learn that you now qualify for a discount.”
Consider the following when preparing your annual review:
Have You Gotten Married or Divorced?
It is important to update your homeowners insurance but before doing so make sure a home inventory is created of merging households. Updating auto insurance is important, so take the time and review policies. Find which policy offers the best combination of price and service. There may be discounts for insuring multiple cars as well as being married.
Review life and disability insurance coverage. If one spouse is not working, he or she might depend on the other’s income. If both spouses are working, make financial commitments based on both incomes so the loss of one spouse’s income due to death or disability could be financially devastating without adequate insurance.
If you have gotten divorced, you will probably no longer be sharing a car with your former spouse and have likely moved to a different residence. If this is the case, you should inform your insurer as you will need to set up separate auto and homeowners policies. Life insurance policies should be adjusted as well.
Is There a New Child in Your Home?
If you have recently added a child to your family, it is important to review your life insurance and disability income protection. If you are planning for your life insurance to match your survivors’ expenses after your death, the new child will no doubt add to those expenses, requiring more life insurance to keep your family secure. If you plan to save for your child’s college education, life insurance can assure completion of that plan. And if you keep your current life insurance policy, do not forget to update the beneficiary designations to include the new child.
Have You Switched Jobs or Experienced a Significant Change in Your Income?
If you had life and disability insurance through your former employer and your new employer does not provide equivalent protection, you can replace the “lost” coverage with individual policies. In the case of an income increase, you may have taken on additional financial commitments that your survivors will depend on. Make sure to review your life and disability insurance to ensure it is adequate to maintain those commitments.
These are just a few of the many reviews that the Insurance Information Institute recommends as the new year approaches. Have you done extensive home renovations? Have you acquired any new valuables that a standard homeowner’s policy may not cover? Check out their report for more information.