In life, things are constantly changing. From new family members to career shifts, financial goals to health changes, your personal circumstances evolve, and so should your protection needs.
Having the right protection in place can provide security and peace of mind in times of uncertainty. However, just having a policy or plan in place is not enough. It’s crucial to regularly review your protection needs to ensure they still align with your current situation.
Here’s why reviewing your protection needs on a regular basis is so important:
Your Life Changes, and So Should Your Protection
Life events such as getting married, having children, buying a home, changing jobs, or even experiencing health changes can significantly affect your protection requirements. For instance:
- Starting a Family: When you have children, your life insurance needs might increase to ensure that your dependents are well taken care of if anything were to happen to you.
- Buying a Home: A new mortgage means your home insurance may need to be adjusted to reflect the value of your property.
- Health Changes: If you or a family member experiences a health change, you might need to reassess health insurance, critical illness coverage, or life insurance policies to accommodate these changes.
To Keep Up with Inflation and Changing Costs
Inflation affects the cost of living, including medical care, housing, and education. What may have seemed like enough coverage five years ago may no longer be sufficient to cover expenses. For example, if your life insurance was based on the idea that you would need to replace a specific income or cover certain debts, the rising cost of living might make that amount inadequate. Reviewing your policies regularly allows you to adjust for inflation and ensure you’re still adequately covered.
Ensure Your Coverage Reflects Your Current Financial Situation
As your financial situation improves or changes, your protection needs will also evolve. If you’ve received a salary increase, inherited money, or paid off significant debt, your protection strategy may need to be reassessed. Conversely, if you experience a financial setback, such as a job loss or business struggles, your policies may need to be adjusted to reflect a new budget or level of risk tolerance.
For instance, as you build assets, you might need higher levels of life insurance to protect your wealth for your heirs. On the flip side, if your income drops or you retire, you might need to adjust your protection to reduce the premium costs.
New Insurance Products and Policy Enhancements
The financial industry is constantly evolving, with new products and policy enhancements introduced regularly. You may be missing out on better coverage options or more cost-effective policies that suit your current needs. For example, new critical illness coverages or advancements in medical care could make certain policies more valuable or relevant to your current life stage.
When you review your protection needs, you can also explore these new options and make adjustments where necessary, ensuring you have the most effective and up-to-date protection available.
Changes in Legal or Tax Requirements
Laws and tax regulations change over time, and these changes can have a direct impact on your protection needs. Estate planning, inheritance tax, and tax laws relating to savings or investment products are all examples of areas where changes could affect how you should structure your protection. By regularly reviewing your needs with the guidance of a professional, you can ensure that your protection strategies are still compliant and optimized for tax efficiency.
To Maintain Peace of Mind
While life is unpredictable, having the right protection in place gives you peace of mind, knowing that you and your loved ones are financially secure, no matter what comes your way. Regular reviews provide a safety net that ensures you’re never caught unprepared, whether you’re facing an unexpected illness, a sudden death in the family, or a major life change.
Without regular reviews, you could find yourself underinsured or over-insured, which could leave you vulnerable in the event of a crisis. A tailored and up-to-date protection plan gives you confidence that your financial security is sound.
You May Have Gaps in Coverage
Sometimes, protection plans can have gaps or exclusions that leave you vulnerable. This might include gaps in health coverage, life insurance exclusions, or insufficient disability protection. As your life evolves, you may uncover new needs that weren’t previously considered when you first set up your policies. Regular reviews help identify these gaps, allowing you to address them before they become problematic.
How Digby Associates can Help With Reviewing Your Protection Needs
By regularly reviewing your protection, you ensure that your coverage evolves as your circumstances change, keeping you adequately protected against life’s uncertainties. Don’t wait for a major life event to prompt a review—take proactive steps now to ensure that you’re always prepared for whatever comes next.
Regularly reviewing your protection needs isn’t just a smart financial move—it’s an essential one for your long-term peace of mind and security. At Digby Associates we can go through what protection you currently have in place and talk about any improvements that could be made. Book an appointment to have a chat with one of our advisers, take a look at our protection pages or download one of our free information guides.
Estate Planning and Inheritance tax is not regulated by the Financial Conduct Authority