
These days, life cover is flexible enough to shift with every stage of life. As such, an annual look at the very least (or when big changes happen) is an ideal time to refresh your cover to make sure it caters for all your and your family's needs.
Whether you've had a life insurance policy for a while or are considering one for the first time, being meticulous in meeting your life cover is incredibly important.
It's also important to understand that the decisions you make when you first take out a policy are not set in stone. Just like your life, your life cover needs can - and likely will - change over time. These days, life cover is flexible enough to shift with every stage of life. As such, an annual look at the very least (or when big changes happen) is an ideal time to refresh your cover to make sure it caters for all your and your family's needs.
The annual audit checklist
"Auditing your life cover plan at least once a year is one of the best ways you can ensure that your financial future is as secure as it can be," says Discovery Life financial adviser, Claire van Wyk. "This planning tool is in your hands. What you're planning for may be largely out of your control to entirely prevent, but the opportunity to have a plan in place is a responsible action you can take to ensure a far better outcome."
Small adjustments can have a crucial effect. "How you work with your policy makes all the difference," van Wyk adds. "Working closely with your adviser, it's best to make slight adjustments annually as opposed to trying to give your plan a complete overhaul every five or ten years."
"If you think about it, risk is present all the time. So, tending to your plan more frequently helps to leave you and your loved ones a little less vulnerable should the unthinkable happen," she explains further. An annual review allows you the opportunity to find potential gaps in your cover in relation to changing needs in areas such as your lifestyle, health or finances.
"Through the process, you can determine whether or not you have enough cover or the right mix of cover benefits. It's also a chance to review your beneficiaries and ensure that all pertaining details are indeed still correct," adds van Wyk.
Here's how to approach an annual cover audit in six simple steps:
Step 1 |
Take a look at the full picture and assess your plan against your current circumstances Assess your current cover in its entirety to determine whether or not it is still realistically sufficient in relation to your circumstances. More importantly, can your current coverage realistically provide enough financial security if a major life event had to occur today? It's important to consider how any potential changes in your life may impact your plan, such as:
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Step 2 |
Cross-check that any of your plan benefits or the policy in its entirety haven't lapsed Such a set of circumstances could bring about a nasty realisation if you had a need to claim, so it's crucial to double check things frequently enough - especially policies you may have had with an employer before retirement. It's also a good idea to go over any fine print to check at what age your benefits may be stipulated to lapse at. |
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Step 3 |
Ensure that your list of beneficiaries and their details are up to date Just as your own circumstances may change, so too can those of your beneficiaries. This can affect how your plan is administered when needed. So, it's important to update changes as they directly affect you and your chosen beneficiaries. Things to consider include:
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Step 4 |
Reassess your life insurance goals
This is a great opportunity to align your current and potentially foreseeable needs against your goals to ensure that you plan enough cover should it be needed down the line. |
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Step 5 |
Relook your estate plan
Your estate plan needs to factor in your life insurance cover. To avoid negative implications, liabilities and legal pitfalls, it's a good idea to review your entire estate plan annually too as part of your life insurance audit. |
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Step 6 |
Carefully consider any sound advice given by your financial adviser The aforementioned steps all paint a clear enough picture of your current life insurance coverage. Where gaps or oversights have been identified, assess your options together with your adviser to best identify a fitting solution to either add or change in your policy structure. A knowledgeable adviser is best placed to assess what solutions are available in the market and advise on which may be a good fit for your needs and goals. |
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Discovery Life Limited. Registration number 1966/003901/06, is a licensed insurer, and an authorised financial services and registered credit provider, NCR Reg No. NCRCP3555. Product rules, terms and conditions apply.