Change is a necessary part of life, or change is the only constant thing that happens in our lives and we all face it in our own way. We go through different stages of life and our needs and circumstances keep changing through these stages. You go to college, receive your first salary, get married, become a parent, retire, and to survive through all these different phases, you should have the capability to adapt according to the changing situation. A person who is adaptable to changes faces less resistance with life and is able to enjoy every moment of it. Your Life Insurance Portfolio can manage a lot of things for you.
The same concept is applicable to your life insurance policy. The policy which you bought some years ago may not fulfill your current requirement because, at the time of purchase of the policy, your financial obligations and situations were different from the current one. With the advancement in age, responsibilities increases and it becomes necessary to review your life insurance portfolio according to changing financial needs and circumstances. So we have mentioned some important reasons to review your life insurance portfolio in this article.
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Change in Lifestyle
Change in lifestyle is applicable to everyone during their life and with the increase in income, your lifestyle also evolves into high standards of living. You may shift to a posh area, buy a new car, add facilities to your home to make your life easy, shift your children to better schools, but you must understand that the up-gradation in your lifestyle needs to be backed up with upgraded life insurance cover also. It will help your family enjoy the same lifestyle even in your absence.
As we move forward in our life, there is a change in us, and many times this change proves to be right for us. Healthy living makes many things easy for us and a life insurance policy is a prime example of this. Living a healthy life can provide relief in insurance premiums, will provide you best rider with the plan.
Change in Income
Everyone loves a hike in their salary because it allows them to widen the limit of their expenditure and savings. With the increase in income, cash flow also increases and it becomes necessary to enhance your life insurance cover accordingly. The basis of calculating your cover for a life insurance policy is your income. A Human Life Value (HLV) helps you to decide your cover for a life insurance policy because it takes income as the base. The right cover is seven to ten times your actual net worth.
If you lose your job or your income gets steeper due to uncertain circumstances, then a review of your insurance portfolio becomes necessary. You may wish to lower your insurance premium due to financial obligations or surrender the policy in a worst-case scenario.
Must Read: Affordable Life Insurance Policy in India
Inflation
When talking about inflation, considering the time value of money is imperative. Time value of money explains that the value of money keeps depreciating with time due to inflation. The value of an Rs.100 note in today’s date will not be the same in the future and that’s why to tackle inflation, you need to upgrade your life insurance policy also.
Becoming a Parent
Turning into a parent is one of the best feelings of life, but you also need to realize that your responsibilities also increase with the addition of a new family member in your house. And that’s why when you turn into a parent, you need to enhance your life insurance policy also because the number of dependents is one of the main factors while deciding the amount of cover in your life insurance policy. An increase in the number of dependents means an enhancement in the cover of the life insurance policy.
Becoming a parent is like a blessing, but it’ll come with a lot of responsibility and these kinds of things are really make your portfolio good. Parentship is make you way stronger than before, and a life insurance policy makes things simple for parentship and it’ll share a burden of yours.
Assets
With the increasing assets and the passage of time, you achieve most of your financial goals and you are able to accumulate enough wealth to support your family. This is the time when you should consider decreasing your life insurance. When you were young, you don’t have enough savings, and your family was dependent upon your every monthly income and that’s why your need for insurance was different while at an advanced age, your saving and assets increased, and your need for insurance changed.
Loans And Debts
Loan and debts are one of the biggest responsibilities of life and the right life insurance policy act as a risk management tool for your liabilities. With the passage of time, your loan and debt can also increase and in such cases, liabilities should be backed up with a modification in a life insurance policy. Your liabilities were different at the time of purchase of the policy and it may not sufficient for your current loan and debts. To increase your amount of cover with increasing liabilities.
New Long Term Goals
Long-term goals need a proper financial backup for effective achievement. You might have set a long-term goal like buying a home or a car at the start of your career, which can be added up with children’s education and marriage in later phases of your life. So to achieve newly added long-term goals because of increasing responsibilities, you need to modify your life insurance policy accordingly.
Time to time review of your insurance portfolio will help you adjust your life insurance policy, according to your changing needs and circumstances. Just buying a life insurance policy is not enough for your whole life. So review your insurance portfolio at different stages of your life and enjoy the benefits of your policy as long as you want.