How To Review Your Insurance Coverage: Key Factors To Consider

Insurance is not a "buy and forget" product. As life evolves — be it through marriage, birth of a child, a new job, a medical condition or even inflation — your insurance coverage needs to be adjusted to meet the expanding responsibilities.

The insurance policies are primarily bought by individuals to guard any financial crisis arising out of unforeseen circumstances at different stages of life. However, many people fail to review their policies periodically, leaving themselves either underinsured or overinsured.

Reviewing your insurance coverage regularly ensures that you're protected enough to face any situation when it matters most. It also helps in finalising the appropriate insurance coverage without paying more than you need to.

Your life insurance policy should provide your dependents with a financial safety net in your absence. If your responsibilities have increased — say you've had a child or taken a home loan — your existing life cover may no longer be sufficient.

Financial advisers suggest that your life cover should be at least 10 to 15 times of your annual income. Revisit your life goals annually and adjust your sum assured as needed.

With rising healthcare costs in India, a Rs 5-lakh individual health cover may no longer be enough. Review whether your current policy includes pre- and post-hospitalisation, daycare procedures, maternity benefits (if relevant) and critical illness coverage.

If you have a family floater plan, ensure the sum insured is adequate to cover all members. Also, check if your policy includes coverage for modern treatments and has a good network of cashless hospitals in your area.

Many salaried individuals rely solely on employer-provided health and life insurance. But such policies are usually limited in coverage and cease once you leave the company. It's crucial to have independent insurance policies to ensure continued protection regardless of employment changes.

If you've renovated your home or bought high-value items (like electronics or jewellery), update your home insurance accordingly. Similarly, if you've bought a new car or your vehicle has depreciated significantly, revisit your motor insurance to ensure you have the right coverage type.

One of the simplest yet most important things in reviewing your insurance coverage is ensuring all your policies are active. Check for missed premium payments or renewal dates. Opt for auto-debit or reminders on your smartphone to avoid accidental policy lapses, which can be disastrous when you need to make a claim. 

Big life events like marriage or the death of a nominee should prompt you to update nominee information in all policies. This ensures the rightful person receives the benefit without legal complications.

Insurance policies can be complex. If you're unsure about your coverage needs, consult a certified financial planner or insurance adviser who can assess your life stage, financial goals and risk profile to recommend the right coverage mix.

An annual review of your insurance coverage is always essential. As your financial responsibilities grow, so should your protection. Take the time to assess and adjust your insurance portfolio so that you're not caught off guard by life's uncertainties.