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Life Insurance Policy Renewal – 7 Points To Consider

When it comes to protecting your family and your near and dear ones against the many uncertainties of life insurance seems to one of the most appropriate tools for the job. Specifically, life insurance is designed as an instrument which can act as a financial safety net for your loved ones in case the worse does come to pass. However, the benefits of life insurance extends much further than that and can even allow you to acquire significant tax benefits. Life insurance policies are also excellent instruments for saving money and also for ensuring a readily liquid source of funds to cover for emergencies.

Benefits

  • Earn tax rebates and write-offs
  • Easily earmark funds to be invested regularly
  • Fund long term financial goals without the risk of uncertainty
  • Assures income through annuities
  • Facilitates growth through dividends

Considering the many benefits of investing on a quality life insurance policy, you might have already purchased one already. However, everything in life must be a little tweaked and tuned up from time to time to meet the requirements of the present.

This idea holds true when you think about your life insurance policy in a little detail. Has enough time elapsed between when you purchased the policy and now? What major changes has your life gone through? In case these changes are significant enough, you might want to review your policy and if required, modify it to suit your needs.

Things to Consider

When it comes to life insurance, the idea might be passed around as a one time, fire and forget deal, but the truth is far from it. After any major or a set of major life events, your term life insurance needs to be adequately modified. Here are the things you might want to consider when you do decide to review your policy.

  • Change of Employment – The first job or even for that matter, any subsequent change in employment can bring about an increase your income level. This in turn is likely to bring about a definite change in your lifestyle and as a result, your expenses. You should consider changes in your income level when you review your life insurance because your sudden demise may leave your family financially vulnerable given the increase in lifestyle expenses.
  • Increased Tax Burden – Once your income level changes, you are likely to find yourself paying more in terms of income tax. One of the great benefits of having a life insurance policy is that they can provide tax exemption which in turn can lead to a reduction of your tax burden or if you have been able to do some smart financial planning, can earn you tax rebate.
  • Marriage – One of the most significant milestones in an individual’s life is marriage. The subsequent effects of getting married may include a restructuring of finances, increased expenditure and in some cases, an increase in the number of dependents. This means that you should review your life insurance policy keeping your spouse in mind. You might want to find out if your spouse is already covered and for how much before you decide to buy more coverage under your policy.
  • Purchasing a Home – Buying a new house is a big investment with significant financial ramifications. When you do decide to invest your savings in acquiring a new home, you might want to check if your current life insurance coverage amount is enough to cover your outstanding home loan balance. Buying the right amount of coverage post home ownership will be able to relieve your surviving family members deal with the financial burden of monthly mortgage payments.
  • Becoming a Parent – One of the greatest joys and challenges in life is to successfully raise a child. Therefore, when it comes to becoming a new parent, you should review your life insurance coverage and consider increasing your coverage. The cost of raising a child well is pretty significant and with a well-rounded policy in place, you’ll be able to leave behind a financially secure legacy for your child in case the worse does come to pass.

While you review your life insurance policy, consider how much and to what extent you wish to protect your family’s future financially. Armed with the right policy with adequate coverage, you and your family can go ahead and enjoy a lifestyle of your choosing without having to worry about future uncertainties.

Written By: PolicyBazaar - Updated: 29 May 2020
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Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
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