An annual insurance review is a great opportunity to consider all major life events that occurred in the previous year. Whether it’s getting married, having a child or making a major home improvement, you will want to make certain that your coverage reflects changes in your life and provides you with adequate coverage.
During the annual insurance review, you will need to look at your home, auto, life, and umbrella insurances to ensure that your policies match your current coverage needs and budget. It is all part of managing your personal life changes.
A lot can happen in one year that can have a significant impact on your insurance costs, coverage options, and limitations. Among these are the following:
- Marrying or divorcing
- Children graduating from high school/empty nest/child off to college
- Beginning a new job
- Recruitment of new employees
- Purchase new commercial equipment
- Establishing a new enterprise
- Accepting elderly parents into your home
- The acquisition or receipt of an ostentatious gift
- Your immediate family member has died
- Mortgage repayment
You should notify the insurer if you buy or sell a home, a vacation property, an automobile, or a recreational vehicle. You should also notify them if you have remolded your house or moved to another location.
Each of these things can trigger substantial changes in your coverage needs and your annual premiums. If it’s a major event that has changed your life, chances are it will alter your insurance coverage needs as well.
An annual insurance review of your policies gives you the opportunity to explore how these changes affect your coverage needs and ensure that you have appropriate coverage.
Here are few questions you may want to ask your insurance broker at your next review.
Do I qualify for any available discounts? Many insurance providers offer a variety of discounts. Something as simple as choosing a newer vehicle with advanced safety features can help you save on your insurance premiums. Updating the wiring in your home or adding a new alarm system may result in discounts on your home insurance. Additional discounts may apply if you insure both your car and home through the same provider, if you don’t have any claims, or if no one in your household is a smoker.
Does my policy provide enough coverage to rebuild my home today?”
Insurance companies replace lost items with “like kind and quality,” it is important to estimate the full cost of replacing finishes, appliances, electrical systems and plumbing systems in determining your coverage.
Many homeowners are surprised to learn that their policy is outdated and does not provide sufficient coverage to rebuild their existing home. Changes in construction costs (they can vary from year to year), upgrades to a kitchen or bathroom, new kitchen appliances, or updates to a basement can all affect the cost to repair or rebuild your home. For example, new finishes in your kitchen can change your existing kitchen from “standard” to one that’s considered “semi-custom” or “custom.”
I just got divorced, can that affect my auto insurance?
When you separate from your partner, you can no longer claim the multi-policy discount that you received during your marriage. Insurance rates will most likely rise when you lose a spouse to either divorce or death.
If divorcing, make sure that you get your partner’s consent before removing them from your coverage. Get different addresses for yourself and your ex and use them for each auto insurance policy. You will share liability if you still live at the same address.
Will a newly finished basement affect my policy?
A finished basement may not only increase the cost to rebuild your home, but it may also require additional coverage to protect items from water damage. For example, optional water backup coverage will help protect new furniture and carpet in your basement if a sump pump breaks or a drain backs up.
Does my policy cover landscaping or outdoor appliances?
Installing a new sprinkler system, a larger storage shed, a new pool or hot tub, or buying a substantial backyard grill are outdoor changes that may require a homeowner’s policy upgrade.
Do I need extended coverage for valuables?”
Your existing policy provides standard coverage for your home and belongings, but this coverage may not be sufficient for all your valuables and is frequently overlooked. For instance, you may need additional coverage for wedding rings, valuable golf clubs or other sports equipment, family heirlooms and antiques, musical instruments or artwork in your home.
Life situations change from year to year and it is important to manage how those changes will affect our finances and insurance needs. Plan to meet yearly with your insurance broker to go over an annual insurance review of your personal life situation and make adjustments to your policies accordingly.
Annual attention to your insurance coverage could save you thousands of dollars in the long run. When was the last time you reviewed or updated your insurance policies?
The Annual Life Insurance Policy Review Checklist: 7 Easy Steps
A thorough life insurance policy review should start with this checklist. By checking off each box, you’ll be able to assess whether or not you have enough, or the right, coverage—or whether you need to turn to a trusted financial advisor to fill any gaps or update information.
- Step #1: Assess your current policies to determine if you have sufficient insurance coverage.
- Step #2: Review your policies to ensure that coverage has not lapsed and will last as expected.
- Step #3: Update policy beneficiaries if necessary and check that policy ownership is optimal.
- Step #4: Research the financial health of your current insurer.
- Step #5: Evaluate the previous year’s life insurance goals and whether they need to be adjusted.
- Step #6: Protect your estate from taxes by researching potential federal and state tax implications.
- Step #7: Request recommendations for updating your policies from a trusted financial advisor.
Step #1: Assess the Current Coverage of Your Life Insurance Policies
According to research from Bankrate, 60% of Americans have life insurance, but only about half of them have sufficient coverage to protect the actual financial needs of their family. A key goal of any life insurance policy review, therefore, is to determine if your coverage is realistically sufficient should a major life event occur.
Life insurance is typically purchased during key life stages, i.e. when you get married or have your first child, and then put on autopilot, as you pay your premiums without much thought. However, as you age or your family grows and spreads its wings, you need to reassess your coverage.
If you have several teens, are you financially prepared for college? Or, alternatively, do married adult children need less protection than when they were children? Also easy to overlook is the rising cost of funeral expenses—something that may not have even been a consideration when you first purchased your policy in your younger years.
Step #2: Review Your Life Insurance Coverage
Life insurance policies that were purchased over 10 years ago may either be out of date or have lapsed—and you may not even be aware of it. For instance, recent retirees often see their generous work-sponsored policy lapse after they step away from their careers.
Workplace life insurance is a common form of coverage but is designed to cover families in the event of the unexpected death of the breadwinner. These policies often end upon separation from a company, including at retirement—a time when excitement for your new life stage can often overshadow insurance policy logistics.
In addition, many universal life policies have seen adjustments to their mortality and expense charges which have had a negative impact on the coverage duration. A policy that was scheduled to last through age 90 may suddenly be on track to lapse at age 83. If that is sooner than your life expectancy, you have a problem that needs to be addressed immediately. A life insurance audit can identify outdated policies so that you can fill any coverage gaps with the help of a financial advisor.
Step #3: Ensure All Your Desired Beneficiaries Are Protected and Ownership Is Correct
Keeping your beneficiaries, as well as your policies, up-to-date is another critical step in your life policy annual insurance review. Schedules are busy and free time hard to come by, especially after major life events. You may not have made changes to a policy after a divorce or the death of a loved one. Perhaps new grandchildren need to be added as beneficiaries or adult children’s shares reduced.
A life insurance policy review and audit presents an opportunity to confirm the contingent beneficiaries on each of your policies, as well as who will receive the policy proceeds in the event that your primary beneficiary has passed away. The more possibilities that are accounted for when it comes to beneficiaries, the better for the health—and stability—of your family and their financial future.
Ownership is critical as well since improper ownership can lead to very harsh tax treatment. It may be beneficial for policies to be trust-owned or owned by children or someone else depending on circumstances. This is very important and should not be overlooked.
Step #4: Research Your Insurer and Their Services
This step of the life insurance policy review is where it becomes absolutely critical to have the guidance of a professional. The financial health of your insurance company or companies must be assessed on a yearly basis; instability in the financial markets may have had an impact on the company underwriting your policy. A goal of your audit should be to ensure that your provider is still in a good long-term financial position to meet its obligations, including the eventual payout on your policy.
An experienced advisor will have the expertise to review your policies. They can also research your specific life insurance products and if your premiums are in line with your coverage. Insurance costs fluctuate year to year. Your advisor should not only be helping you work toward your long-term goals, but also optimizing your current premiums, potentially saving you money in the short term as well.
Step #5: Evaluate and Review Your Life Insurance Policy Goals
As you review your life insurance policy coverage, you should evaluate the goals of your current policies. For example, you may have purchased a policy to safeguard your spouse and children, ensuring that the mortgage would be paid and college expenses covered in the event of your untimely death. If your children have graduated and the house has been paid off, however, a policy expert may advise you to reevaluate your goals and make adjustments as necessary. Perhaps your focus can be realigned from covering college expenses to helping your children build up a retirement nest egg, for instance.
Health considerations also fall into this phase of the audit and are a key factor in why experts recommend annual life insurance policy reviews. Your ability to procure a new policy may be tied to your health and expected longevity; an annual assessment will enable you to make coverage adjustments if there has been an unexpected change in either.Make sure to talk about these important factors at your annual insurance review.
Step #6: Protect Your Estate from Taxes
Your financial advisor should have provided guidance on minimizing estate taxes when you initially purchased your policy. However, if your coverage includes employer-sponsored insurance or additional policies you may have purchased separately, they—and you—may not be fully aware of all of the estate tax implications and potential pitfalls. An expert financial advisor will conduct a full review of tax liabilities as part of your life insurance policy audit.
Step #7: Recommendations for Future Life Insurance Policies
After your life insurance policy review checklist has been completed, you should have a clear picture of your current coverage, as well as any potential gaps or oversights. If it turns out that you and your heirs are properly covered, your time investment is still well worth the ROI in terms of greater peace of mind. If, however, there are any gaps in your coverage, your advisor will be in a prime position to recommend the best financial solutions specific to you and your family’s circumstances, which could include additional policies, pre-emptive tax planning, or the inclusion of other financial planning products and services that will help you achieve your goals for a financially secure future.
Just as fire departments advise that homeowners use Daylight Savings as a reminder to check the batteries in their smoke detectors once a year, you should consider penciling in a life insurance audit to your yearly calendar as well. The day you choose is of no consequence, so long as you schedule a time, every year, to sit down across from your financial advisor and thoroughly review your existing life insurance policies.
Several years ago, the Life Insurance Market Research Association (LIMRA) conducted a life insurance IQ test; only one-third of consumers passed. Most Americans don’t have a good understanding of life insurance, let alone their specific policies. Take the exam for yourself, then decide if you want to risk the financial health of your heirs when an afternoon sit-down with an advisor could provide all the security you need for the coming year. The risk of insufficient coverage or erroneous policies is significant and could be devastating. Call your advisor today for a life insurance policy audit and review. Don’t leave your financial future to chance.
Reviewing your insurance regularly helps ensure your coverage is what you expect it to be in the unfortunate circumstance that you need to file a claim. It also aids in making informed decisions regarding coverage and being proactive about minimizing your insurance costs.What is an annual insurance review? ›
During an insurance review, your agent will go over specific details about your life and insurance policies to make sure that all your needs are met. Secondly, you may find something that you don't currently have covered, a discount that you aren't taking advantage of or an extra coverage to add at no additional cost.What are 4 reasons why it's important to have insurance? ›
- Financially Security. ...
- Transfer of Risk. ...
- Complete Protection for You and Your Family. ...
- No More Stress or Tension During Difficult Times. ...
- Some Types of Insurances are Compulsory. ...
- Peace of Mind.
Purpose of insurance
Its aim is to reduce financial uncertainty and make accidental loss manageable. It does this substituting payment of a small, known fee—an insurance premium—to a professional insurer in exchange for the assumption of the risk a large loss, and a promise to pay in the event of such a loss.
What is an annual review? Your local authority must review your child's Education, Health and Care (EHC) plan at least once a year. This is to look at how your child is progressing and to ensure that the plan is kept up to date. This process is known as the annual review.What is an annual insurance benefit? ›
Annual maximum benefit: The yearly maximum amount that the insurance company will pay for the benefits for which you are covered. Lifetime maximum benefit: The maximum dollar amount that an insurance company will pay for benefits for as long as an individual is enrolled in the plan.What is an explanation of review from insurance company? ›
An EOB is a statement from your health insurance plan describing what costs it will cover for medical care or products you've received. The EOB is generated when your provider submits a claim for the services you received. The insurance company sends you EOBs to help make clear: The cost of the care you received.Why is insurance so important in today's society? ›
It covers you for repairs and replacement of any damage that's covered in your policy. It provides protection against theft, damage from perils like fire and water, and financial responsibility that could result from a visitor or guest being accidentally injured on your property.Why is insurance so important in society? ›
Insurance plays a crucial role in alleviating people's fear of sudden misfortune by mitigating loss through services and /or financial compensation.What is the most important thing about insurance? ›
Being insured allows you to transfer the risk of a catastrophic financial loss to the insurance company. And if you don't have a policy when you need one, it could mean big trouble. The nature of insurance means you can't decide to get it once the disaster occurs and you find yourself uninsured.
- 1.) Insurance Keeps Commerce Moving.
- 2.) Lenders Require Insurance.
- 3.) Insurance is Compulsory in Some States.
- 4.) Insurance Grants Peace of Mind.
- 5.) Insurance Ensures Family and Business Stability.
- 6.) Insurance Protects the Small Guys.
- 7.) Insurance is the Right Thing to Do.
Provide protection : The primary purpose of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happending of the risk, but can certainly provide for the losses of risk.Why is it important to have an annual review? ›
The purposes of the annual performance evaluation process are to promote communication and provide useful feedback about job performance, to facilitate better working relationships, to provide an historical record of performance and to contribute to professional development.Why are annual reviews so important? ›
Good performance reviews allow managers to deliver fair and actionable assessments to their direct reports. This can increase employee engagement, provide strong recognition and encouragement, and create tangible paths for employee growth that are rooted in accountability.Why have an annual review? ›
They help make sure everyone's personal goals are aligned with the company's goals and give valuable insights on ways the employee and the manager can improve. When performance reviews are put first, the entire company can benefit. Improve employee performance without the pain.What annual insurance means? ›
An annual insurance policy is a policy paid for by the year as opposed to by the month. Therefore, a policyholder who pays a yearly premium would receive one year of coverage. Annual insurance policies are offered for a wide variety of insurance products.What annual coverage means? ›
Annual Coverage Limit
This is the maximum amount you can get reimbursed over a 12-month policy period. It resets when a new policy period begins. For example, if you selected an annual limit of $2,500 and had $2,700 in covered veterinary costs during your policy period, you would get reimbursed $2,500.
Most dental plans have what is called an “annual maximum" or "annual benefit maximum.” This is the total amount of money the dental benefits provider—say Delta Dental—will pay for a member's dental care within a 12-month period. That time period is called a benefit period.What is the purpose of a claim review? ›
The claims review service examines the controls in place to ensure all items and services billed to Medicare or a state Medicaid program are medically necessary, appropriately documented and coded and billed in accordance with standards.How do you write a review about a provider? ›
- Keep your paragraphs short. ...
- Have someone proofread your review before posting it.
- Ask yourself what you would want to know if you were a patient considering this doctor.
- Share the review on social media or with friends.
- Consider sharing the review with a birth advocacy organization.
For the latest Standard and Poor's Ratings, visit the agency's web site at www.standardandpoors.com (or call 212-438-2400). To access the Insurer Financial Strength Ratings on the web site, click on the “Ratings Lists” link, and then choose the “Insurance” category.What is an annual review NHS? ›
The purpose of an annual review is to ensure patients are taking the right medication and receiving the best possible care, this is done by conducting appropriate tests and checking the patient is taking the correct medication.How long does insurance review take? ›
Typically, under the terms of the insurance policy and/or by state law, the adjuster must complete an initial review and send a response within a reasonable amount of time – usually on the order of 30 days.Are annual reviews reliable? ›
Annual Reviews remains a reliable and trusted source of information. As we begin 2022, we've highlighted the high-impact articles from our 51 journals that attracted the most attention from readers during the year.How often should you review your insurance? ›
You should review all of your insurance needs at least once a year. If you have a major life change, you should contact your insurance agent or company representative. The change in your life may have a significant impact on your insurance needs.What is an insurance underwriting review? ›
Insurance underwriting involves evaluating an applicant for life or property insurance. It determines the risks of filing large or frequent claims and assessing how much coverage a person can be given, how much they should pay and how much an insurance company is likely to pay to cover the policyholder.Why is my insurance company ignoring me? ›
If an insurance company is still not returning your call, this might be a bad faith tactic. Insurance bad faith means the company is not handling your claim fairly or reasonably. It is not handling your claim honestly or with a good faith attempt at upholding its end of the contract.Is an annual review mandatory? ›
The Fair Labor Standards Act (FLSA) does not require performance evaluations. Performance evaluations are generally a matter of agreement between an employer and employee (or the employee's representative).What should you not say in an annual review? ›
- "That wasn't my fault"
- “Yes, yes, yes”
- “You said/you did...”
- "It was really a team effort"
- “This isn't fair”
- “Can I have a raise?"
- "That's not part of my job description"
- Talk about your achievements. ...
- Discuss ways to improve. ...
- Mention skills you've developed. ...
- Ask about company development. ...
- Provide feedback on tools and equipment. ...
- Ask questions about future expectations. ...
- Explain your experience in the workplace. ...
- Find out how you can help.
So, our suggestion would be that policies are reviewed every two years at a minimum. The best way to proactively tackle policy and procedure review is just to build it into your business calendar. Try to tackle reviewing one policy every second month. This will allow you to achieve 6 policies in a year.Do you have to review life insurance? ›
Failing to review your insurance policy could result in having too much or too little cover. The former could leave you over-paying for cover you don't need, while the latter could mean your family isn't left with enough financial support if something happened to you.