The main purpose of a life insurance policy is to provide financial security to your beneficiaries in case of an unfortunate eventuality. The payout that your nominee may receive will be based on the life cover that you opted for at the time of purchasing the policy. It is likely that you chose this amount on the basis of your then income, liabilities, and investments. However, needs change over time, and it is possible that you or your family might need more coverage than what was initially anticipated.
Thus, reviewing your life insurance plan from time-to-time is crucial if you want to ensure that changing circumstances haven’t left a gap in the coverage that you currently require and the coverage that you previously opted for. Read on to know more about how to review your life insurance policy and what to check for when reviewing the policy.
Ideally, you should review your life insurance policy any time your circumstances change or if you’ve recently crossed a key milestone in your life. However, this might prove to be quite cumbersome since your life insurance policy might not always be on the top of your mind. Thus, it is recommended that you review your policy and its terms and conditions on an annual basis.
1.Type of life insurance product: There are a range of life insurance products and plans to choose from. Some of the popular types of life insurance products are term insurance plans, whole life insurance plans, unit-linked insurance plans (ULIPs), endowment plans, annuity plans, etc. These products serve different needs and offer benefits and payouts to the policyholder accordingly. Thus, if you chose your policy based on your stage of life at the time of purchasing it, it is a good idea to check if the life insurance policy that you have is still working for you.
2. Sum assured chosen: At the time of purchasing a life insurance policy, you are required to opt for a sum assured. This is the minimum amount of money that is guaranteed to your nominee in case of an untimely eventuality. Thus, it is necessary to review this amount and decide if it is still sufficient for your dependents. Many insurance providers allow policyholders to make enhancements to their sum assured at policy anniversaries or during key milestones in their lives. Hence, you should make sure to check your sum assured and revise the amount if need be.
3.Your payouts: The payouts that are provided by an insurance plan are largely dependent on the type of life insurance product purchased by you. A money-back policy, for example, offers payouts in the form of survival benefits to the policyholder. Thus, this type of a policy will be ideal for an individual who is looking for a life insurance product that will also help in long-term savings. On the other hand, a unit-linked insurance policy (ULIP) offers market-linked returns to the policyholder, and is, thus, an excellent choice for individuals looking to invest in stocks, mutual funds, etc. During your annual review, it is vital that you check if the payouts offered by your policy is sufficient and if it is in accordance with your financial goals.
4.Beneficiaries: When you purchase a life insurance policy, you will have to make a nomination. In case of an unfortunate eventuality, your nominee will receive the death sum assured. Thus, it is a good idea to review this information from time-to-time. Most insurance providers give policyholders the option to change their nominee or add another nominee. In case you have nominated more than one person, you can also check the percentage of the sum assured amount that each person is eligible to receive. Lastly, also make sure to check if you have updated your nominee’s contact details.
5.Your contact details: During your annual review, make sure to check if the details that you furnished to the insurer at the time of purchasing the policy are correct. Also, if you have recently moved, you should check if your current address and contact number have been provided to your insurer.
6.Options available to you: Most insurers offer riders that policy buyers can purchase along with their base policy to enhance the coverage offered to them. While you may or may not have chosen riders while initially purchasing your policy, it is smart to assess your needs and check if you can purchase any additional riders in order to customise the coverage offered to you.
7.Premium charged: The premium charged for a life insurance policy is usually dependent on several factors such as your age at the time of purchasing the policy, policy tenure, sum assured, riders opted for, etc. Typically, the premium that you pay for a policy is indicative of the risk undertaken by the insurer by providing you a life cover. However, different insurance providers use slightly varied yardsticks to calculate the premium payable. Thus, it is essential that you check if the premium that you pay is a fair price for the life cover that is offered to you.
Reviewing your life insurance policy is a fairly easy task. To start the review process, you will need to read through the policy document that was given to you by the insurance provider after you purchased the policy. Alternatively, you can also choose to access the policy document through the insurer’s online Customer Portal, if this option is available.
After reading through your policy document, if you have any queries or wish to make any additions/updates to the policy, you will need to contact the insurer through any one of the customer care channels mentioned on the insurer’s official website. If you purchased the policy through an agent, you can also contact the insurance agent directly.
Considering the fact that you purchased your insurance policy to provide financial protection to your family, it is vital that you review your policy on a regular basis in order to ensure that the policy still provides adequate coverage that is sufficient for your family.