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Is it necessary to review your insurance policies?



If someone were to ask how prepared you are for times of crisis, are your insurance policies sufficient to equip you for such instances?


Most of us would most certainly have insurance coverage. However, we would not be able to remember the details about the insurance purchased previously. Majority of us would have a rough idea of what we are paying for, whether the policies are term insurance or permanent but only a handful would be sure if the coverage they have is sufficient for their needs.


Change is the only constant in life. Just like your will or your retirement plans, it is necessary to regularly review your insurance portfolio to ensure it is still relevant for you and your loved ones. Reviewing your policy does not mean that you need to change all your policies, it simply means that as the world changes holes may appear and you need to know what you can do.


When should you review your policies?


Change In Lifestyle Needs

As we age, we will experience changes to our income, mortgage, family dynamics and retirement needs. All of the above will directly impact our life insurance needs.


For example, the rule of thumb for life insurance is 10 times the annual salary for an individual. If you have just received a promotion or switch a new job, it is likely that this prompts an increase in salary too. It would be a good idea to review your policy anytime your salary is adjusted. In the event of unforeseen circumstances, your family can continue to live comfortably instead of scrambling to meet the loss of your extra salary.


Having a child is another instance that prompts a change in insurance coverage. With a new addition to the family, more life insurance planning is required. With growing inflation and rising education costs, the couple would need to plan early for their child’s future requirements. They should consider taking plans that offer premium waiver benefits so that their child is financially secured even if his/her parents are not around. After the child becomes financially independent, the couple should reshuffle their portfolio again to take on larger health insurance coverage instead.


Change In Regulation

“The Life Insurance Association is pro-actively introducing changes to provide for current and anticipated needs of individuals in Singapore. This is especially important given the changing demographics of our community, medical advancements and expectations of today’s society, “said Dr. Khoo Kah Siang, President of LIA Singapore. Over the years, Singapore has been constantly implementing changes to provide better protection for the well being of individual over their lifetime.


For instance, in 2014, Life Insurance Association (LIA) has revised the definitions of critical illnesses and expanded the list of Critical Illness (CI) from 30 to 37. LIA Singapore has revised the framework so that insurers can provide CI coverage for more medical conditions. This allows Singaporeans to benefit from the introduction of more innovative products that will cater to diverse and more specific needs. For example, under the new framework, there is no limit to the number of medical conditions that can be covered under a CI plan, and insurers can also offer single-illness CI plans. Therefore, if you have bought a CI policy prior to 2015, it would be a good to consult your financial advisor and relook at your portfolio.


Review The Performance Of Financial Products

You might have an endowment policy for your child’s education or an investment-linked plan for your retirement needs. Regardless of the plan purchased or your goals, it is important for you to know where your money is going. It is great if the expected projections of the financial products you purchased are on par with your expectations. Otherwise, it would be good to take other measures early to improve the situation. Rather than being caught off-guard, knowing how well your investments are doing and making changes along the way is critical to keep you on track of your financial goals.


The above examples are just the tip of the iceberg that prompts insurance portfolio review. Ultimately, buying insurance policy is not the end of your financial planning journey. You need to review your insurance portfolio at regular intervals with your financial advisor to maximize the benefits of having insurance coverage.

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