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10 life events that may require a review of your long-term insurance

With the fast pace of life, it’s easy to lose sight of how quickly your personal and financial situation is changing.

September being life insurance month, now is a good time to review the long-term insurance coverage you have in place. With the fast pace of life, it’s easy to lose sight of how quickly your personal and financial situation changes – with many life events being triggers to adjust your insurance coverage up or down.

In this article, discover 10 life events that may require a risk coverage review.

  1. Changing jobs: A move from one employer to another will undoubtedly require a review of the risk cover because it is likely that the group benefits offered by your new employer will be different from those you enjoyed before. This is an excellent time to determine the life, disability (lump sum or income protection) and/or critical illness benefits offered by your new employer and whether there are any gaps in your risk portfolio. Remember that any shortfall in cover can be resolved by taking out personal insurance, although this cover is likely to be more expensive as you will be taken out individually. As such, it’s generally a good idea to first maximize the group coverage offered by your employer and then top up any shortfalls using personal insurance. Don’t forget to obtain confirmation of your new group benefits before signing your employment contract.
  2. Getting a raise: An adjustment to your salary may also lead to a review of your insurance coverage for several reasons. First of all, group life and disability capital guarantees are often expressed as a multiple of your annual income, which means that a salary increase will result in an increase in life and disability capital coverage. Second, group income protection is usually expressed as a percentage of your designated income, which means your disability income will increase accordingly. If you have personal insurance coverage in place to supplement the coverage shortfalls, your salary increase may therefore allow you to reduce your personal coverage somewhat, which should lead to cost savings.
  3. To be cut off: Following a cut, your group insurance coverage will drop, which could leave you dangerously underinsured. While cutting costs is likely a priority, think carefully before reducing or canceling any personal life insurance you have in place, as you may not be able to get coverage at the same price in the future. In addition, any change in your medical condition may lead to exclusions if you apply for coverage later. With your group coverage gone, it’s important to take stock of the personal coverage you have in place and make adjustments to ensure you’re not financially exposed during unemployment.
  4. To marry: Entering into a marriage or life partnership will likely require a review of your life coverage to ensure that your spouse or partner is adequately provided for in the event of death, and vice versa. The amount of life cover you need will depend on a number of factors such as your spouse’s net worth, employment, income level, living expenses and health status, among others. Once you’ve adjusted your life cover, make sure your policy and beneficiary designations are properly structured so proceeds are appropriately allocated in the event of death.
  5. Financing a property: When financing property with a home loan, it is common for the finance organization to insist that you take out a bond as security for the loan. While most financial institutions offer bond coverage to their customers, it’s usually more cost effective to increase your existing life insurance policy by the value of the home loan. Remember to review this coverage regularly as your home shrinks to make sure you’re not paying for life coverage you no longer need.
  6. Have children : Welcoming a new baby to your family should prompt you to review your life cover to ensure that your child will be adequately provided for financially if you are gone. Before increasing your life coverage, think carefully about your child’s financial needs, including costs such as schooling and higher education, childcare and aftercare, sports and extramurals, and health care. then adjust your life coverage according to the funded amount. Again, be sure to review and adjust your life coverage as your children grow to ensure you’re not paying for coverage that’s no longer needed.
  7. Start your own business: If you are resigning from a formal job to start your own business, it is likely that your risk coverage portfolio will require a complete overhaul as several factors will need to be considered. For example, if your group life insurance offers a continuation option, this can be a useful way to obtain cost-effective coverage on a personal basis. Indeed, a continuation option allows you to convert your group life insurance into personal insurance when you leave a company job, with the advantage of minimal, if any, medical underwriting. If you need to increase your personal coverage, you will be medically insured for the increased part – a process which will take into account the nature of your occupation, your qualifications, your smoking status, your current state of health, the extent and destination of your business trips. , and any high-risk activity you do regularly, such as motocross or scuba diving.
  8. Change in family situation: As your children grow and begin to become more financially independent, the burden of having to support them in the event of their death decreases, providing the opportunity to adjust their life insurance coverage accordingly . At this point, it’s also a good idea to review how much your net worth has increased and completely reassess the need for life coverage in your overall portfolio. Before canceling life coverage, however, think carefully about other financial planning considerations such as the need for cash in your deceased estate and whether there are other family members, such as siblings. or elderly relatives, who are – or are likely to become – financially dependent on you.
  9. Divorce: A divorce is a sure reason to review your life insurance, especially since your financial goals and objectives are likely to be completely reconfigured. Additionally, if you were ordered to pay child support pursuant to your settlement agreement, your divorce order may require that you obtain sufficient life insurance coverage to meet your support obligations in the event of your death or disability. . It is likely that following the divorce you no longer wish to support your ex-spouse financially should anything happen to you, which would allow you to adjust your policy accordingly. Again, before reducing any coverage, think carefully about the financial situation of your children if you die prematurely, taking into account the financial stability and reliability of your ex-spouse, the current age of your children and of your net worth. .
  10. Outgoing: Retirement is an important event from a financial planning perspective and it is essential to review your insurance coverage at this stage. Remember that if you officially retire from your employer, your group life and disability insurance will disappear. Take a careful inventory of your personal insurance coverage to determine which benefits disappear at retirement, bearing in mind that certain benefits, such as the lump sum, generally cease at retirement age. Above all, make sure you understand the effects this will have on your overall wallet and your ability to self-fund in the event of a disability or critical illness. If you have whole life insurance in place, make sure you understand the role it plays in your estate plan and that it’s structured to suit your purpose.