The policies that were just right for you five years ago—even one year ago—may not be just right today. Thus, you should review your insurance every year or after a major life event, such as marriage, divorce, the birth of a child, a new job, or the death of a spouse or dependent. During that review, consider these seven questions:
Have you recently married or divorced?
A marriage or divorce may affect several different types of insurance needs, including:
- Life—If you’ve recently married, you may want to purchase a life insurance policy that would provide a source of additional income to your surviving spouse if you die. If you’ve recently divorced, you’ll want to remove your ex-spouse from your insurance policies and name a new beneficiary.
- Health—Typically, you will need to add your new spouse to your employer-sponsored health insurance within 30 days of marriage or wait for the open enrollment period that usually occurs once a year. I you are divorce, you’ll want to remove your ex-spouse from your plan.
- Homeowners—If you’re combining households, you may need to increase personal property insurance so that all possessions are protected in case of theft or damage.
- Auto—Many insurance companies offer discounts for multiple policies. The savings can be significant if both you and your new spouse have autos insured by the same company. Insurance companies that offer both auto and homeowners insurance may provide even larger discounts for those who purchase both types of policies.
Has your spouse died or become disabled?
These types of changes warrant a reassessment of all your insurance needs. If your spouse had died, you’ll want to rename beneficiaries on your life insurance policies.
Have you had a baby?
According to the Insurance Information Institute, five million households with new babies have not updated their life insurance protection. You should ensure that your life insurance coverage is sufficient to provide for the child’s needs until adulthood, perhaps including education expenses in addition to day-to-day expenses.
Also review your disability insurance coverage, since you now have another dependent relying on your income. Look into both short- and long-term disability coverage. Many employers offer some level of disability insurance coverage. However, do not assume that coverage is sufficient. You may need to purchase additional insurance to supplement that offered by your employer.
Keep in mind you typically have 30 days after birth to add your child to your employer-sponsored health plan.
Are there any new drivers in your household?
If you have a teenager who has just started driving, be prepared for significant auto insurance increase. Insurance companies often give premium discounts when the new driver has taken a certified driver’s training course or is a good student, so make sure to check with your insurance company. Once your child goes away to college, inform your insurance company if your child did not take a car to college.
Have you switched jobs and/or dramatically increased or decreased your earned income? Have you retired?
If you have a significant increase or decrease in your income that has caused changes in your lifestyle, you may want to adjust your life insurance policy.
Once you retire, reevaluate your life insurance to see if any changes are warranted. And if you’re no longer commuting every day, you may qualify for lower auto insurance premiums. Also make sure to review your long-term-care needs.
Have you acquired any valuables?
Have you purchased or sold a home? Your homeowners insurance policy, which also covers personal property up to specified limits, typically covers new purchases automatically. However, make sure that any new purchases don’t exceed the limits of your policy, or the item may not be covered. Periodically review your inventory of personal property and compare it to your homeowners insurance.
Have you made extensive renovations on your home?
The Insurance Information Institute indicates that nearly 40% of homeowners who have significantly remodeled their homes have not updated their homeowners insurance. Make sure to review your policy limits when you add significant value to your home. It’s actually a good idea to review your policy periodically to make sure it will replace your home if it is totally destroyed. Changes in the cost of rebuilding a home can outpace the limits of your policy, and you don’t want to be left unprotected.
It’s a good idea to reassess your insurance needs at least once a year. Please call if you’d like to discuss your insurance needs in more detail.