You’re Probably Due for an Insurance Policy Review
Regular reviews of your home, auto, health, disability, and life insurance policies should be a part of your financial plan and budget. Your insurance needs can change over a year, so you should make sure you’re not paying for coverage you don’t need or are leaving yourself exposed to extra risk with a gap in coverage. With a review, you can catch any mistakes, bundle multiple policies to save money, or maybe find a better rate and policy elsewhere.
The best times to review your policies are when they’re up for renewal or when a major life change happens, like the birth of a child or moving to a new house.
How to make policy reviews fast and easy
To make all future policy reviews easier, make a one-page summary for each policy (so one for home, one for auto, etc.). Most policies have a page called a "declarations page" or "policy summary" that will have most or all of the info you need for your homemade summary page.
What to include on each policy summary page:
- Type of policy (home, auto, life, disability, health, etc.)
- Insurance carrier with contact information and log-in credentials for their online portal
- Policy number
- Date issued
- Premium costs—amount, how often paid
- Who and what is insured and any beneficiaries in the case of life insurance
- Coverage, benefit, and restriction details
Your other option is to contact your agent for each policy (if they’re spread across separate carriers) to explain and review your current coverage and any discounts available to you.
You might think that, out of all of your insurance policies, your life insurance is the one you can set up and forget—but it really isn’t. You’ll want to review the total death benefit and early access to that benefit in the case of a terminal illness diagnoses to make sure your beneficiaries will get what they need when they need it.
If you have a term life insurance policy, be sure to have a reminder on your calendar for when the policy is set to expire and to evaluate your options for other coverage.
If your policy has a cash value, tracking its investment performance will show you if you can forego premiums (if it’s doing well) or if you need to pay higher premiums to keep it in force (if the investments are performing poorly).
Several life changes will affect the coverage and protection you need from your auto policy, like adding or subtracting drivers from your policy, a change in a vehicle’s value, different driving habits—like a new commute to work—or getting a new car.
Health insurance policies are notorious for changing each year. Be sure you know your deductible, co-pay, and maximum out-of-pocket costs. For example, if your policy has a $3,000 deductible and a $6,000 out-of-pocket max, you'll want to have $9,000 set aside in an emergency fund or Health Savings Account (HAS) to use for that purpose.
If the coverage changes significantly, you may want to consider switching plans.
Important details to understand about your disability coverage include the monthly benefit that is payable, how long it would pay you, and how the insurance company defines disability. Be sure your coverage reflects the risk and dangers you face at and away from work and would actually pay enough to keep your family afloat while you recovered or searched for another job.
Make sure your policy is labeled “own-occ,” meaning coverage begins when you can’t do your specific job. An “any-occ” policy is based on you being unable to do any work considering your training, education, and experience. But that might mean taking a much, much lower paying job that can’t support your family.
If any changes have been made to your residence that affect its value or the cost to replace or rebuild it, or you’ve bought, inherited, or sold valuable items recently, you’re due for a property insurance update, whether that’s home owners, renters, or condo insurance.
The following events warrant updated or expanded coverage:
- Your home has appreciated in value and it would cost more to rebuild now than when you purchased the insurance policy
- Home renovation, upgrade, or expansion
- Purchase of new kitchen appliances
- A newly finished basement
- Installation of sprinkler system, storage shed, pool, or hot tub
- Major purchases, gifts, or inherited valuables
- Marriage, divorce, or adult children who move back in or out of your home with their possessions
You may qualify for discounts on your policy if you installed:
- Home alarm system
- Flood lights
- Updated smoke alarms
- Hail-resistant roof