Marriage, having a child, retirement are just some of the life events that can have a profound effect on insurance needs, so an annual New Year’s coverage review is always a good idea
“One of the best ways to start the new year off on a firm financial footing is to make sure that your insurance coverage is up-to-date,” said Jeanne M. Salvatore, senior vice president, I.I.I. “A major change in your life such as retirement, adopting a child, investing in a major purchase or moving can have a profound influence on your insurance needs. Take the time to discuss these changes with your Insurance Professional so that you and your loved ones are financially protected. You may even learn that you now qualify for a discount,” noted Salvatore.
Consider the following 10 questions when preparing for an annual review with your Insurance Professional:
- Have you gotten married or divorced? If you have gotten married and are merging two households, you may need to update your homeowners insurance. It’s also a great time to create a home inventory wedding registries make it very easy to create lists.
Couples may also bring two cars into the relationship and two different auto insurance companies, so take the opportunity to review your existing coverage and see which company offers the best combination of price and service. And, don’t forget to ask about discounts as there may be savings for insuring multiple cars, as well as for being married.
Reviewing life and disability insurance coverage is prudent. If one spouse is not working, he or she might be dependent on the working spouse’s income. The spouse who is not working outside the home should also consider having a separate life insurance policy because, in the event of premature death, the services he or she provides for the household would need to be replaced, and that could prove costly to the surviving spouse. If both spouses are working, couples often make financial commitments based on both incomes so the loss of one spouse’s income due to death or disability could be financially devastating without adequate insurance.
If you have gotten divorced, you will probably no longer be sharing a car with your former spouse and have likely moved to a different residence. If this is the case, you should inform your insurer as you will need to set up separate auto and homeowners policies.
- Is there a new child in your home? If you have recently added a child to your family, it is important to review your life insurance and disability income protection. If you are planning for your life insurance to match your survivors’ expenses after your death, the new child will no doubt add to those expenses, requiring more life insurance to keep your family secure. If you plan to save for your child's college education, life insurance can assure completion of that plan. And if you keep your current life insurance policy, don’t forget to update the beneficiary designations to include the new child.
- Did your teenager get a drivers license? It is generally cheaper to add your teenagers to your auto insurance policy than for them to purchase their own. If they are going to be driving their own car, consider insuring it with your company so you can get a multi-car discount. And choose the car carefully—the type of car a young person drives can dramatically affect the price of insurance. You and your teens should choose a car that is easy to drive and would offer protection in the event of a crash.
Also, encourage your kids to get good grades and to take a driver training course. Most companies will give discounts for getting at least a “B” average in school and for taking recognized driving courses
If your teenagers move at least 100 miles from home—for example, to go to college—you can get a discount for the time they are not around to drive the car (assuming that they leave the car at home).
- Have you switched jobs or experienced a significant change in your income? If you had life and disability insurance through your former employer, and your new employer does not provide equivalent protection, you can replace the “lost” coverage with individual policies. In the case of an income increase, you may have taken on additional financial commitments that your survivors will depend on. Make sure to review your life and disability insurance to ensure it is adequate to maintain those commitments.
If your income decreased, you may want to cut your life insurance premiums. Term life insurance is a good option, as the premium rates are very reasonable. And if you already have two or more policies you might be able to replace both with a single policy at a lower rate by reaching a “milestone” amount of insurance. (For example, at many life insurance companies, $500,000 of insurance costs less than $450,000 because of the milestone discount.) But don’t drop existing life insurance until after you have a new policy in place.
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