Why are annual reviews important?

When was your last insurance portfolio review?

A well-structured insurance portfolio should evolve alongside your personal and professional life.

As a general rule, any significant change – such as a career transition, marriage, parenthood or a shift in financial priorities – may necessitate adjustments to your insurance policies.

These changes impact your financial obligations, underscoring the importance of conducting annual reviews with your financial advisor.

The benefits of an annual insurance review

1. Ensuring adequate coverage: In the event of a loss, your insurance policy should provide sufficient protection.

During an annual review, your advisor will assess key details such as your coverage amount, policy term, riders and premiums.

This ensures that your policy aligns with your current needs and financial goals.

2. Accounting for inflation: If you purchased your policies several years ago, your coverage may no longer be sufficient due to rising costs.

An insurance review allows you to adjust your coverage to keep pace with inflation, ensuring that you and your loved ones remain financially secure.

3. Identifying coverage gaps: Over time, new financial responsibilities such as loans or business ventures may require additional protection.

An insurance review helps identify potential gaps in coverage and provides an opportunity to explore solutions that safeguard your assets and future plans.

4. Addressing market and policy changes: Insurance companies frequently update policies and introduce new products to better meet their clients' evolving needs.

For instance, critical illness coverage was once limited to ages 70 or 75, but today, some policies offer coverage up to age 80.

Annual reviews help clients stay informed about these advancements, ensuring they make the best decisions for their financial future.

5. Reviewing beneficiaries: Many clients overlook updating their beneficiaries after major life changes, which can lead to unintended payouts or legal complications.

Annual reviews ensure that your loved ones remain properly protected.

Annual reviews in insurance planning are essential to keeping your financial protection aligned with your evolving needs.

They provide an opportunity to make informed decisions while strengthening your relationship with your advisor or agent, ensuring that you and your family remain adequately protected.

This column by Nutan Ragoobir, a senior insurance professional, author and founder of the Girmitya Foundation, will appear bi-monthly in Business Day.