When did you last review your life cover?
Every person reading this blog probably already has life cover, Mortgage protection or a Serious Illness policy in place. Most likely you took it out when getting your Mortgage because the Bank told you to, right? You set up the Direct Debit, put the policy documents in a drawer somewhere and never looked at it again thinking ‘job done’.
A number of years (or maybe longer) have passed and that Direct Debit is still going out every month but do you know if the cover you have is still appropriate for you, is it sufficient? have your circumstances changed since you took out the policy? After all, would you keep paying the same rate of car insurance if you changed your car ?
There are a number of reasons why it may be a good time to review your existing cover.
- Smoker Status: Smokers pay almost twice as much for their life cover as non-smokers. If you were priced as a smoker when you commenced a plan but have since given them up (and have been off them for at least 12 months) it is well worth getting an up to date quote. There are obvious health benefits to giving up smoking but why not get a financial benefit also.
- Marital Status: Has your marital status since taking out your original policy? Are you single now through death or separation? you may need to review your life insurance. Do you still need cover? are your children no longer dependent on your income? If so, then it might be appropriate to cancel your cover. However if you are now a lone parent with dependent children then you may have to increase your cover
- Children: Expecting a baby? Do you now have more children than when you took out your original cover? You need to make sure you’re children are financially looked after if something is to happen you or your partner. Having a mortgage protection alone is NOT sufficient, A mortgage protection policy will simply clear your mortgage, it will pay off the Bank, it will not leave a cash lump sum to pay for the day to day needs of your surviving family. This is what life insurance is for.
- Buying a Home OR moving Homes: You must take out a mortgage protection policy when you buy a family home. We would always advise putting a separate life insurance policy in place too to protect your family. Mortgage protection will take care of the house; life insurance will take care of the people you love in it.
- Changed Jobs: Do you have a new job? Have you been made redundant? Do you have an increased income? As your income has risen, you may need to increase your life cover too. Remember life insurance is there to replace your income lost on death. If there is more income to replace, then you need more life insurance. Does your employment contract provide life cover benefits that you’re not aware of? If so, maybe you can reduce your existing cover.
- Shop around: A recent survey by the Life Assurance Company, Royal London found that you could pay as much as 21% more for Life Cover if you buy it through your bank rather than from a Broker. Other factors such as the Gender Directive in December 2012 or simply the competition between life companies, could mean that it is possible for you to reduce your monthly premium without compromising on the quality of cover.
At Wealthwise we are not tied to any single product provider, we use market leading software ClearChoice™ to ensure all of our clients get the protection policy which is most appropriate to their needs. It’s not always about price, the cheapest life cover may not be the best for you.
ClearChoice™ is researched based comparison software, it helps us provide each client with a detailed reports comparing all life cover product providers on the basis of benefits rather than price.
So, whether you would like a quote for your first life cover, mortgage protection or Serious Illness policy or you would just like the peace of mind of knowing that your existing policy is still appropriate, please don’t hesitate to contact us at firstname.lastname@example.org or 071 9650699.
Barry Kerr BBS QFA CFP® is the owner of Wealthwise Financial Planning, Bridge St, Carrick on Shannon, www.wealthwise.ie. Barry Kerr T/A Wealthwise Financial Planning is Regulated by the central Bank of Ireland. All details and views contained within this article are for informational purposes only and does not constitute advice. Wealthwise Financial Planning makes no representations as to the accuracy, completeness or suitability of any information and will not be liable for any errors, omissions or any losses arising from its use.