A life insurance policy plays a significant role in a family’s security. The loss of an earning member could prove to be financially devastating for a family in absence of a proper life insurance policy. 

Most of us know the importance of a life insurance policy and many of us subscribe to it at a young age itself to make use of the low-premium advantage.

While that could work, what happens if your financial or family status change over time? 

This brings about the importance of re-evaluating your life insurance plans once in a while. Let’s look at some instances where re-evaluation could be proved useful.

1. If you want more coverage – While you advance in life, your family will too, and they might need more coverage to stay financially fit if something unfortunate is to happen to you. If it feels like this is you, then you might want to think about increasing your coverage. A lot of factors, including inflation, could play a part here. Rs. 10 lakh a decade ago doesn’t have the same purchasing power today. So, it’s ideal to take in factors like inflation and change the coverage occasionally, if needed.

2. If you want to change the beneficiary – There are several situations where a change of beneficiary is needed – the person could have unfortunately passed away or you might simply want to move the responsibility of such a huge amount to another family member. In these scenarios, you should re-evaluate and if needed, change the beneficiary of your life cover. Choosing the right beneficiary is very important in helping your life cover help your family timely and adequately. 

3. If you want a change in policy – As we move ahead in our life, your needs might also change. You could add a rider that will make the life insurance more comprehensive, or you could switch to another policy or insurance provider that you think is more suited to your requirements. A re-evaluation in these scenarios will help switch to a plan that might work better for your family.

4. If you have a change in income – Insurance experts say that ideally, your insured sum must be six to ten times your annual income. Your annual income might significantly change over the years and this change will affect your family’s lifestyle too.  Hence, it is a wise idea to re-evaluate your insurance plan if your insured sum falls below the suggested limits.

5. If there is a change to your health condition – If you, unfortunately, falls critically ill, you might need to give more financial protection to your family. In these cases, it would be a wise idea to re-evaluate and change your policy even if it costs more than normal.

6. If you have taken a loan – If you have recently taken a loan, that could be a debt trap that can fall upon your loved ones if you, unfortunately, have to leave them behind. Hence, if your current life insurance policy seems inefficient to cover loans that you could have taken recently, it’s a wise idea to revisit your life insurance plan and make sure the insurance plan is comprehensive of your debts and liabilities.

7. If you just had a major life event – If you have a major life event, like a marriage or childbirth, your life insurance policy should be comprehensive enough to cover the valuable addition to the family. Hence, after such an event, it is advisable to revisit and re-evaluate your life insurance policy.

How to change your life insurance policy?

There are two ways to change your life insurance policy. You can either surrender your current policy and buy a new one or you could buy supplemental life insurance coverage, as per your need.

An insurance expert could help you with choosing what is right for you. You could also take the help of a life insurance calculator online to figure out plans and premiums.