Why and How to Review Your Life Insurance

Life is a journey filled with milestones and unexpected turns. Just as your life evolves, so too should your financial plans, including your life insurance policy. This trusted financial tool offers peace of mind, knowing your loved ones will be financially supported if something were to happen to you. However, a policy taken out years ago might not reflect your current needs and circumstances. Here at Health Advisory NZ, we believe in empowering New Zealanders with the knowledge to make informed decisions about their financial well-being. This guide explores the importance of reviewing your life insurance policy and provides a step-by-step approach to ensuring it remains relevant and effective.

Why Review Your Life Insurance Policy?

Life throws curveballs. Here are some key reasons why reviewing your life insurance policy is crucial:

• Life Changes: Promotions, marriage, children, or caring for elderly parents – all these events impact your financial responsibilities and potentially the amount of coverage your loved ones might need. Revisiting your policy ensures it reflects your current financial picture.
• Inflation: The cost of living goes up over time. Reviewing your policy ensures the death benefit is still enough to cover your loved ones’ expenses like mortgages, education costs, or living expenses.
• Health Changes: Your health can influence your insurance premiums. If your health has improved significantly since you first obtained coverage, you might be eligible for a lower premium.
• Policy Options: The insurance landscape constantly evolves, with new riders, features, and coverage options emerging. A review allows you to explore if these options could better serve your changing needs.

The New Zealand Context:

According to the Financial Services Council (FSC), nearly 1.2 million New Zealanders have life insurance. However, many may not realize how important it is to review their policies regularly. Understanding the specific terms of your New Zealand life insurance policy, including any exclusions or limitations, can help you avoid potential surprises down the road.

A Step-by-Step Guide to Reviewing Your Life Insurance Policy:

1. Gather Your Documents: Locate your original policy documents and any amendments or communications you’ve received from your insurance provider.
2. Review Your Coverage: Understand the type of life insurance you have (e.g., term life, whole life), the death benefit amount, and the beneficiary designations.
3. Evaluate Your Needs: Consider your current financial obligations, future goals for your loved ones, and any changes in your personal life that may have altered your needs.
4. Review the Cost: Analyze your current premium and explore if there are any options to lower it without compromising coverage.
5. Contact Your Insurance Provider: Schedule a consultation with your insurance advisor to discuss your findings and explore potential adjustments to your policy or new options that align with your evolving needs.

Seeking Professional Guidance:

A qualified financial advisor can be a valuable resource throughout this process. They can help you interpret your policy details, answer your questions, and guide you towards options that best suit your current situation and long-term goals.

Remember: Taking the time to review your life insurance policy demonstrates your commitment to securing your loved ones’ financial well-being. By following these steps and potentially seeking professional advice, you can ensure your policy remains a powerful tool for supporting your family throughout life’s journey.