In an ideal scenario, you should sit down and carefully review your insurance policies every year, or at the very least, every two years, making adjustments as needed. There are several critical aspects to consider:
1. Property Value Fluctuations
Has the value of your home increased? Four years ago, we purchased our house and opted for home insurance covering the full replacement value. This meant we would receive full compensation for replacing items. However, over the past four years, our home has appreciated by $31,000. Additionally, we’ve added items to our home, such as extra computers for our growing kids.
It’s time to update our insurance coverage to reflect the current value of items within our home and the appreciation of the property itself. This ensures we have adequate funds in case we need insurance compensation. Always inquire whether your insurance covers the labor costs required for rebuilding if your home is destroyed.
Moreover, if you don’t periodically review your insurance coverage, you might find your rates have increased. Regularly checking rates can save you on home insurance costs.
2. Changes in Beneficiaries
Life is unpredictable, and the beneficiaries you selected might need adjustments. I once read a story about a deceased man who divorced his first wife about eight years ago and remarried. However, he never updated the beneficiaries on his various policies. Consequently, when he passed away, his life insurance payout went to his ex-wife instead of his current wife, with whom he had children.
You might have initially designated all your children as beneficiaries, but circumstances change. Perhaps one child has been more supportive, or another child has become financially independent, and you want to allocate more to the financially dependent one. Life evolves, so review your beneficiaries annually and decide if modifications are necessary.
3. Improved Health Conditions
If you purchased life insurance while dealing with health issues like being overweight, pre-diabetic, or having high blood pressure, reassess your policy when things change, and your health improves. Losing weight, maintaining a healthy weight, or controlling medical conditions may allow you to lower your annual premiums.
Similarly, if you’ve made strides in improving your health, are no longer pre-diabetic, or have controlled your high blood pressure, reflecting these changes within a 20-year policy can save you hundreds of dollars.
4. Check Rates and Bundle
The insurance market undergoes changes every year, so take the time to shop around, call various companies for quotes, and see who can offer you the best price. If you haven’t already bundled various insurance policies with the same company, inquire about potential discounts and see how much you could save.
We bundled our car insurance for two vehicles with our home insurance, and the discount was substantial – I couldn’t find a better rate with other companies.
Lastly, inquire about additional discounts. Your teenage driver might qualify for a discount due to excellent grades, or you might get a discount for driving less than 10,000 miles a year. Company discount policies can change, so making periodic inquiries is a good habit.
Avoid the mistake of purchasing insurance and then forgetting about it. In case the unexpected occurs, you’ll be grateful for taking an active role in reviewing your insurance coverage, preventing a severe financial impact. How often do you review your insurance? What other reasons would you add to this list?