Life is unpredictable and, therefore, everyone should be prepared to face all eventualities that come their way. When it comes to the safety and security of your family members against the uncertainties of life, it is pivotal to have a comprehensive life insurance policy in your investment portfolio. A life insurance policy is a specially designed financial tool which can act as a financial weapon for your near and dear ones during emergencies. Besides protecting your family and giving them financial support in your absence, it is a good investment option as well.
However, since nothing is constant in life, the policy that you have invested in a few years back might not be able to still meet your requirements. Based on the incidents that happened in your life over the years you might need to modify the policy before renewing it. The following are the important points that you must consider while renewing the policy:
- Increase in income tax liabilities: As your income increases with time, your income tax liability also increases. It is advisable that with the increase in your income tax liabilities, you could go for a higher sum assured while renewing your life insurance policy to enjoy added advantages. So, while renewing your policy consider this point and check with your tax advisor about the other tax benefits on choosing a higher sum assured.
- Post-marriage responsibilities: Marriage means the introduction of a new person in your life. Your spouse will not only be a part of your life but will also share responsibilities with you. Keeping that in mind, it is ideal to look for a better life insurance policy with better coverage. If you had purchased your life insurance policy before marriage, then it is important to include your partner under the policy coverage while renewing the policy. Remember, with every passing day or year, your life is changing along with a lot of new responsibilities. Thus, instead of simply renewing the existing policy, review it and make necessary changes to provide the best financial security to you and your spouse.
- Purchasing a new home: Purchasing a new home is the dream of almost every individual. However, buying a home needs a huge investment. If you are planning to apply for a home loan or have already opted for one and have to pay monthly EMIs against it, then it is important to draw a balance between your EMIs and life insurance premium. At the time of renewal, talk to your agent and find out the best possible option to ensure that you can pay your loan EMIs on time without affecting your insurance premium payment.
- Inclusion of a new family member: Becoming a parent is one of the most wonderful experiences in life. However, the addition of a new member brings new responsibilities as well. Hence, at the time of policy renewal, you must consider the new member in the family and extend your coverage limit. You should inform your insurance provider about the new member in your family and opt for the best plan to cover your entire family. If you simply renew your existing plan, your baby will not be eligible to get life insurance coverage in the future.
- Change in policy terms and conditions: This is another vital criterion that needs to be addressed before renewing your existing insurance policy. From time to time, life insurance companies change their terms and conditions and the disease cover. So, before renewing, you must recheck all the terms and conditions and find if any new disease has been added or removed from the list. If you simply renew without checking, you will be unaware of the new development resulting in issues for your family members at the time of need.
Life insurance policies need to be renewed on time, otherwise, the policy will lapse, which will result in zero benefit. However, just renewing the existing policy is not enough. In order to get maximum benefits out of the existing policy, you might have to make a few changes based on the latest developments in your life. Hence, the above-mentioned points should be taken into consideration before the renewal.