Your go-to checklist for keeping your life insurance policy up to date
It is important that you review your life insurance cover on a regular basis to make sure that your cover remains relevant to your changing needs and circumstances.
As you move through each stage of life and as your lifestyle or circumstances change, your life cover needs can (and likely will) also change over time.
It is important to understand that the decisions you make when you initially take out a life cover policy are not set in stone. Death, illness, disability and income protection can be updated over time to account for these changing circumstances and to make sure that your life cover remains relevant to your stage of life. Therefore, it is important to review your cover to make sure that it caters for your and your family's needs.
The yearly audit checklist
"Auditing your life insurance policy at least once a year is one of the best ways you can ensure that your financial future is as secure as it can be," says Discovery Life financial adviser, Claire van Wyk. "This planning tool is in your hands. What you're planning for may be largely out of your control to entirely prevent, but the opportunity to have a plan in place is a responsible action you can take to ensure a far better outcome."
Small adjustments can have a crucial effect. "How you work with your policy makes all the difference," van Wyk adds. "Working closely with your adviser, it's best to make slight adjustments annually as opposed to trying to give your plan a complete overhaul every five or ten years."
"If you think about it, risk is present all the time. So, tending to your plan more frequently helps to leave you and your loved ones a little less vulnerable should the unthinkable happen," she explains further. An yearly review allows you the opportunity to find potential gaps in your cover in relation to changing needs in areas such as your lifestyle, health or finances.
"Through the process, you can determine whether or not you have enough cover or the right mix of protection. It's also a chance to review your beneficiaries and ensure that all pertaining details are indeed still correct," adds van Wyk.
Here's how to approach a yearly cover audit in six simple steps:
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Step 1 |
Compare your current life cover with your current circumstances. Assess your current life cover in its entirety to determine whether it is still relevant and sufficient in relation to your circumstances. Does your current cover provide enough financial security if a major life-changing event occurs today? It's important to consider how any potential changes in your life could impact your life insurance needs. Things to consider include the following:
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Step 2 |
Check your life plan benefits, as well as the policy as a whole to make sure they haven't expired.
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Step 3 |
Make sure that your list of beneficiaries and their details are up to date. Just as your own circumstances may change, so too can those of your beneficiaries. It is important to make sure that your beneficiary information is up to date. Things to consider include the following:
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Step 4 |
Reassess your life insurance goals.
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Step 5 |
Review your estate plan.
Your estate plan needs to factor in your life insurance cover. To avoid negative implications, liabilities and legal pitfalls, it's important to also review your estate plan yearly as part of your life insurance audit. |
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Step 6 |
Contact your financial adviser for advice and to make sure that your life cover remains relevant as your circumstances change. Where gaps or oversights in your life cover have been identified, assess your options with your financial adviser to identify an appropriate solution to making sure that your life insurance cover meets your and your family's needs. |
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Discovery Life Limited, registration number 1966/003901/06, is a licensed life insurer, and an authorised financial services and registered credit provider, NCR registration number NCRCP3555. Product rules, terms and conditions apply.