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Five Reasons Why Regular Reviews of Life Insurance and Income Protection Are Essential

Protecting Family

Effective financial planning is crucial for achieving long-term financial objectives. It entails crafting a detailed strategy that encompasses all facets of finance, including investments, savings, protection, and retirement planning.

A robust financial plan offers security, lessens financial anxiety, and aids in making well-informed financial choices. However, devising a financial plan is just the beginning.

It’s equally critical to regularly review and revise your plan to ensure it stays in sync with your evolving financial situation, objectives, and market dynamics. Through consistent reviews, you can implement necessary modifications to maintain the effectiveness of your financial plan. Thus, financial planning and periodic reviews can assist you in reaching your financial aspirations, preparing for unforeseen life events, and securing financial stability.

Nevertheless, the foundation of every enduring financial plan is your capacity to generate income throughout your career. To accumulate savings for retirement, you must have an income. If you have dependents, the loss of your current income could significantly affect your financial future.

Here are five reasons why periodic reassessments of your Protection Needs are just as vital as reviewing your investment and pension plans.

  1. Life events: Life is dynamic, with circumstances that can shift over time. Your protection needs may fluctuate as you encounter various life milestones, such as getting married, having children, or purchasing a home. Regular reviews can help determine if your current protection plan sufficiently covers these new situations. Features like guaranteed insurability and protection continuation options can assist you in adjusting your coverage to match the increased life insurance protection needs that arise from specific life events, ensuring your loved ones are safeguarded.
  2. Professional events: Changes in your occupation or a move to self-employment can significantly affect your financial risk exposure. Moreover, shifts in income due to career progression, job transitions, or business growth necessitate a reassessment of whether your existing protection plan offers adequate income protection in cases of disability or income loss.
  3. Policy updates and enhancements: Over time, insurance policies may be updated or enhanced. Regular reviews are a chance to be informed about any policy modifications, new coverage possibilities, or advancements in insurance products that could better serve your protection requirements.
  4. Financial education: Regular reviews are an opportunity to learn about the significance of safeguarding your financial strategy, keeping you well-informed and engaged in the financial planning process.
  5. Financial peace of mind: Consistently reviewing your protection needs provides peace of mind, affirming that you are actively evaluating your financial health and have robust protection in place. It ensures that you maintain appropriate coverage levels to minimize financial risks and safeguard your loved ones.

In summary, routinely assessing your protection needs ensures that your life insurance remains in sync with your evolving circumstances.

The following case study may help illustrate the concept.

Several years ago, a young couple were purchasing their first home. They opted for a mortgage protection policy with serious illness cover, safeguarding against financial strain from mortgage repayments should anything happen to either of them. At the time, their primary concern was their new home, making mortgage protection the logical option.

Fast forward to today, John and Sarah are now parents to two young children. With Sarah’s recent work promotion and salary increase, their financial obligations have grown – they must now consider their children’s futures and the lifestyle improvements from Sarah’s higher income.

Should John or Sarah unexpectedly pass away or suffer a critical illness, their initial mortgage cover would handle the remaining mortgage payments. However, what about other expenses?

Their present lifestyle, the costs of child-rearing, and potential future educational expenses wouldn’t be covered by mortgage protection alone. John and Sarah must ensure financial resilience against unforeseen life events.

Firstly, they should secure their future income. They need to assess if their income is adequately protected in case of inability to work due to injury or illness. Income Protection insurance would guarantee that John and Sarah can continue mortgage payments even if they lose their earning capacity.

Additionally, they might contemplate extra life insurance or serious illness cover. By reassessing their insurance needs, John and Sarah can modify their policies to match their evolving circumstances, thus maintaining optimal family protection.

*John and Sarah are fictitious characters. Any resemblance to real individuals, living or deceased, or actual events is coincidental.

Source Zurich Life Insurance