Four Things You Might Accidentally Overlook with Your Life Insurance Policy
When purchasing life insurance, many rush the process, deeming it to be a one-time buy. Life insurance is an invaluable safety net that can provide immeasurable support to our loved ones in times of need. However, overlooking certain aspects of our policy or not paying too much attention to it can negatively impact them. To ensure our life insurance policy does what we need it to, there are certain things we must consider. Today, we will be discussing exclusions and inclusions, what it means to be overinsured, the dangers of an outdated policy, and the importance of regularly assessing your current situation to ensure your policy aligns. Hopefully, by the end of this article, you will have a much better understanding of how to ensure your life insurance policy will always do right for you.
Being Overinsured | What Does it Mean?
Being overinsured is quite self-explanatory; it simply means paying more than we should for our life insurance policy and having terms that might not relate to our current situation. While having sufficient coverage is crucial, there is no need to have too much. Additionally, many end up being overinsured by taking out multiple policies and being unaware that they cover the same thing. If your coverage massively exceeds your financial obligations, it is worth checking if the policy is right for you. Furthermore, if you have multiple policies, check the inclusions and exclusions. It may be possible to combine them and significantly reduce your overall premiums.
Understanding Exclusions and Inclusions
The inclusions and exclusions of your policy are what they will and won’t cover. When rushing into purchasing a policy, it is likely there will be exclusions that don’t align with your current situation and inclusions that you don’t really need. Some standard exclusions for life insurance might include deaths resulting from non-disclosed, pre-existing medical conditions and deaths due to high-risk hobbies and activities. Additionally, some inclusions worth considering in your policy are work-related accidents and terminal illnesses.
Why Policies Become Outdated
One of the most significant aspects to be aware of concerning life insurance policies is that they do become outdated. It is essential to note that this is no fault of the insurance providers and often occurs when we face changes in our lives, such as new career opportunities, marriage, children, and a mortgage. To counteract this, it is essential to regularly check your policy and make adjustments whenever necessary. Throughout our lives, our financial obligations evolve, so our policy should be growing with it.
The Right Time to Review Your Policy
It is crucial to review your policy after any of the life changes mentioned above and anything else that impacts your financial situation and obligations. Without reviewing a policy, it is likely it won’t suffice, should it need to. As a general rule, we should be looking into our policy and making adjustments every six to twelve months.
We hope we have managed to clear up a few things about life insurance so you know what you need to do and can make well-informed decisions. Remember, life insurance is one of the most critical aspects of financial planning, and it is essential to know what you are investing in.
