Three things to consider when you review your insurance policy this year

The start of the year is the perfect time for people to update their insurance policies, particularly when they have made changes to their lifestyles. There are many life events that you need to consider when updating your insurance policy, these include starting a family, marriage, divorce and buying a house or even starting a business.

Reviewing your insurance policy is an important practice, because the people you named as your beneficiaries when you began that life insurance policy may not be the ones you want to have listed any longer. Jacques Erasmus of Assupol has listed three important factors you need to consider when reviewing your policy.

Scrutinise each item

Have a look at each of the most important items in your policy.
Funeral: Are the cover levels on the policies still adequate to cover the need should the insured event happen. For example, are all relevant dependents covered on the funeral policies and is the cover sufficient? Do you have any additional children or extended family members that may need to be covered?
Life cover: Are the cover levels on the policies still adequate to cover the need should the insured event happen. Consider the consequences for those of your loved ones left behind should a tragic life event involving the policy holder happen. For example, do you need to pay off a home loan on passing of the main breadwinner? What will happen to the education of children left behind?
Other important cover: It is important to make sure that adequate cover is in place in case of disability, as this could lead to you not being able to work. A person’s ability to earn an income is probably their biggest asset that needs to be protected. Dread disease and critical illness cover will also be important in the event that the main breadwinner cannot earn an income due to these health events.

Does it make economic sense?

Many South Africans are experiencing hard times financially, with the rise of inflation causing prices of products and services to increase. At times, people look to insurance policies to reduce monthly expenses.

For risk policies, it is important to try and keep cover in place, as an unforeseen event could suddenly compromise your financial position. Make sure the cover on your funeral policies have kept up with the increased costs of funerals, and bear in mind that if you do decide to increase your cover, there may be a waiting period that will apply to the increase part of the cover.

Look at your insurer’s changes for the year

More often than not, your insurer will communicate any changes in their policies and fees structure. Should you have any questions or concerns, reach out to your insurance broker for clarity.

For instance, Assupol has not increased funeral policy premiums for many years, and would like to maintain that standard. On the risk product side, the impact of COVID-19- as well as possible future pandemics which may have a long-term mortality impact is still uncertain. However, there are movements in the insurance market to increase rates slightly to make provision for this.

Due to the effects of the pandemic, and to keep the insurance book healthy, Assupol may be increasing risk product premiums slightly over the next 12 months. The economic impact that clients are currently facing will be taken into consideration to ensure that our premiums remain fair and our products remain affordable.