Renewing your Life Insurance Plan? Do it the Right Way!

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  | Published: 29 November 2019 | Last Updated On: 08 February 2021

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While protecting yourself and your loved ones from the uncertainties of life, life insurance appears to be one of the best financial tools for this purpose. Life insurance policy is specifically designed to be a financial safety net for your family, in case the worst were to happen.

However, the benefits of a life coverage plan go beyond this. In fact, life insurance plans are also good instruments to save funds and to ensure a liquid source of money for covering emergencies.

Let us quickly discuss a few benefits of life insurance first.

  • Earmark funds easily for regular investment
  • Ensures income from annuities
  • Funding for long-term financial objective without the risk of uncertainty
  • Earning dividends through the policy

Keeping in mind the outstanding benefits of a suitable life insurance plan, you probably would have purchased one already. But, since change is the only constant in life, everything should be a little spiced and tweaked up with time for meeting the present requirements.

You must be wondering what could you possibly do with life insurance?

Here’s a thought,

Let’s say you bought a new dress that made you look your best. You wore the dress 3-4 times in the next 6 months. Now, there is a change in the weather and your dress is not enough to keep you warm. Hence, you can do nothing but go out and shop for the clothes that suit the weather.

In the same way, if enough time has elapsed from the date of purchase of the policy, there might have been significant changes in your lifestyle. This is when you must review your plan and renew it into the one that suits your present needs.

Points to Consider While Renewing Your Life Insurance Policy

In terms of life insurance, the general idea is a fire & forget one-time thing; however, this could be anything but true. After some major changes in your life, your insurance coverage needs to be sufficiently modified. Listed below are a few things you may want to consider while you renew your insurance policy.

Buying a New House

You don’t just keep buying houses every other day. It is a huge investment with a significant amount of financial consequences.

When you plan to invest the funds you have saved in purchasing your new home, you may want to see whether your current life cover is sufficient for covering the outstanding balance on the home loan.

Purchasing an adequate amount of cover after buying a house will help to relieve the dependents of the policyholder from the financial burden of mortgage payments every month.

Marriage

Marriage is amongst the most significant milestones in any individual’s life. After you cross this milestone of marriage, you may have to restructure your finances as an after effect. This may include increase in the number of dependents and increased expenses (in some cases).

Therefore, you will have to reshape your policy keeping your spouse into consideration. You must see whether your spouse is already covered or not; if yes, then for how much. Only then you should purchase more coverage on your policy.

Having a Child

One of the most challenging yet beautiful experiences of life in raising a child successfully. Hence, when you become a parent for the first time, you must review your life insurance cover and think about increasing your amount of coverage.

The cost involved in raising a kid properly can be quite high and with a sufficient policy in hand, the policyholders will be capable of leaving behind a financially secure legacy for their kids.

The Bottom Line!

If you are armed with a suitable policy along with a sufficient amount of coverage, you can enjoy a lifestyle of your choice with your family with no worries regarding future uncertainties. Therefore, if you think your policy is not up-to-date with your current lifestyle, you can get it renewed accordingly.