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The importance of reviewing insurance contracts

The importance of reviewing insurance contracts

Insurance protects us or our activity from the unexpected. Whether it is a Health Insurance, Professional Indemnity insurance, Director and Officer Insurance or travel insurance, it is crucial to get the adequate insurance coverage.

As time passes and we evolve, so do insurance contracts. Indeed, they are not static and a change of status may revoke the validity of your insurance policy.

The insurance requirements keep adjusting through different stages of our lives or company growth, so it is critical to review your insurance portfolio at regular intervals.

In this article, we have listed the various reasons why it might be a good idea to review your insurance contracts. We have also come up with different life stages that may necessitate restructuring your insurance policies.

Auto-Renewal & Over insured issues

Most companies or individuals auto renew their insurance without looking on the market for alternative and more competitive options. Competition is stiff in the insurance world. Year after year, newcomers or established companies find creative ways to offer greater discounts to acquire or retain their existing customers. Failure to consider other insurance options may result in a higher cost for the same quality service and coverage.

Moreover, most corporations and individuals are covered several times through various insurance plans for the same benefits. This overlap results in paying twice for no reason since two insurance plans will cover the same thing.

Thus, it is important to review your insurance contracts to see what other competitive fares are available in the market and restructure your insurance policies so you don’t have them overlapping.

Inflation

Medical costs may be subject to inflation. With an increase in costs, the amount insured in a life or health insurance policy five years ago may be insufficient towards managing your current financial situation.

Asset Increase   

As you grow older and climb the ladder, you meet your financial goals and tend to accumulate more wealth. The needs of a twenty-four-year-old working individual greatly vary from the ones of middle-aged workers. People with senior positions have accumulated more wealth and assets to support their loved ones. Thus, the need to revaluate your insurance policies increases as your savings continue to grow.

Liability Increase

Taking additional financial commitment will increase your liability. This is an important stage in life insurance portfolio. Proper planning to ensure that your family members are taken care of in the event you are not around is part of the reviewing process.

Income Variation

Getting an increase in revenue, being the subject of a pay cut or job loss will impact your cash flow and spending habits. With income increase, the sum insured on your insurance policy should be upped in tune with your current net worth. On the other hand, in the event of your revenues decreasing, you could consider shrinking your insurance portfolio and restructure it.

Lifestyle Changes

A rise in income often brings a higher living standard. You may embark in some expensive and adventurous hobbies such as skiing, scuba diving, biking in places from all over the world. As such, your newfound hobbies may carry a certain level of risk. When you apply for life insurance, these factors are evaluated and your risk class is determined. However, as you progress through life, your lifestyle may evolve, hens the need to review and restructure your policies. 

New Valuables

Regular home insurance policies provide limited cover for exclusive items. For instance, if you purchase some Art collection, jewelleries or watches, get an ART-plus home insurance to be added to your home contents’ insurance. 

Financial goals

It is important to reassess your insurance portfolio to consider having an insurance with a saving plan to fulfil your long-term financial objective.

Marital Status

Insurance is an important topic to consider when you and your beloved one tie the knot. You can modify your life covers depending on your household’s finances. Regarding divorcees who wish to remain single and do not have any dependents, the cover can be reduced. Following a divorce, you may perform an insurance portfolio review and change the nomination to another family member.

Having Children

Having children requires more life insurance and health insurance to ensure your kid’s upbringing. With a growing inflation and rising education costs, it is important to start planning early for your offspring’s future.

You may always contact us for more information on the subject and we will be more than happy to help you re-evaluate and restructure your insurance portfolio. 

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