If you have life insurance, it is a good idea to regularly review the cover to make sure it’s right for you and your family circumstances.
When you sign up for a policy, the extent of cover – how long it lasts, and how much it would pay out – is based on your financial situation and commitments at that time.
But these can and will change, so your life insurance needs to change as well to ensure your family is fully protected if the worst happens to you or your partner.
Your mortgage
Many people take out life insurance out to cover a mortgage, and it is likely this commitment will change at some point.
For example, if you have moved to a bigger property, the amount you owe your bank or building society could have gone up.
The same may apply if you have remortgaged to release equity from your current home.
Alternatively you may have extended your mortgage term when you moved, or in order to reduce the size of your monthly repayments.
If your original life policy was only designed to run for 25 years (in line with the original mortgage term) it could end before your home loan is paid off.
Family changes
Perhaps the other most common reason to review life cover is changes to the size of your family.
If your original life insurance policy was taken out when you and a partner bought your first home, for example, it may need to be amended when you have your first child – and subsequently for any further children.
Insurance to cover the mortgage may be sufficient when you do not have children, but as your family grows you may also like the policy to provide an annual income (as well as a lump sum to clear the mortgage) in the event of your or your partner’s death.
Although life cover may seem a very simple concept, each provider tends to have slightly different terms and conditions, which change over the years.
Make sure your insurance stays up to date and at the right end of the market by speaking to us or another independent adviser at regular intervals or whenever there is a change in your circumstances.
Even if nothing needs to be changed at least you will know you and your family are protected.
by Charlie Kearns
Independent Financial Adviser
[email protected]
