Reasons why the new year is a good time to reassess your life insurance policy

Think about what you want to achieve this year. Have you written these plans down? According to a study, people who write down their goals are up to 1.4 times more likely to achieve them than those who don't. Part of planning for the year ahead means planning for the unexpected, which is why January is the perfect time to reassess your life insurance to make sure that your plan still meets your needs.

Speak to your financial adviser about your life insurance

The start of the year is the ideal time to go through the six-step life cover audit with your financial adviser.

Your financial adviser can help you update your life insurance plan, which is important because your needs may have changed during the previous year. Together, you can align your goals and make sure that your life cover is right for you and your family, and for your budget.

Here are some important questions to consider with your financial adviser:

• Are there funds to settle my debt or pay my family's medical expenses if I pass away?
• What if I'm unable to work due to an accident or severe illness?
• What will happen to my children's education expenses if I experience a life-changing event?
• If I pass away tomorrow, who will pay for my funeral?
• Is my will up to date and does it reflect all the recent changes in my life?

The life cover yearly audit checklist

This six-step checklist is available for you and your financial adviser to go through. You should do this at least once a year - and January is the ideal time to tackle it.

1. Compare your current life insurance cover to your current needs
Life is always changing - maybe you've added a new member to your family, experienced a loss, or your child is starting university soon. These are just a few examples of factors that could affect your life insurance needs.

2. Check the expiry dates of your life plan benefits
Refer to your policy schedule to check if any of your life insurance benefits have expired. You should also check any policies that you have with your employer.

3. Make sure you have up-to-date details for beneficiaries
It is important to consider details such as a recent divorce or loss, share percentages for adult children, or if the contact details for your beneficiaries have changed. For example, if you have lost a loved one who was listed as a beneficiary, your beneficiary information would need to be updated.

4. Reassess your goals
What are your goals for the year ahead? Are you planning to move abroad, or find a new job? Along with unexpected events, like a severe illness or disability, your goals also impact your life cover needs. A new job might come with changes in your employer-provided risk benefits. It is important to understand any gaps that those changes might create. If you move abroad you may need to plan your risk cover differently, as well as consider cover that will protect you against future currency fluctuations.

5. Review your will and estate plan
A 2022 Discovery Life client survey found that almost a third of the participants didn't have a will, and the Master of the High Court data reveals that more than 70% of working South Africans do not have a will.

Do you have a valid and up-to-date will in place, and what will happen to your offshore investments or business ownership when you pass away? It is important to make sure your will reflects all the recent changes in your life. Events like finalising a divorce, for example, can have a significant impact on your estate planning.

For instance, if you have maintenance obligations in your divorce decree, consider whether you would have enough cover to honour those obligations if you pass away. Winding up a deceased estate, which is the process of settling the affairs of a deceased person, comes with many hidden costs. So if there is not enough money left and there are cash shortfalls, your loved ones might need to sell assets to meet those obligations.

6. Assess your options
Your financial adviser can help you assess your life insurance policy and identify any potential gaps. If there are any gaps in your cover, they can guide you through the available options to address them. This will help you make sure that you and your loved ones are financially prepared for unforeseen events.

Take a moment to think about your life insurance needs. Life is always changing, so make sure your insurance changes with it.

What to do once you've analysed your financial needs

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