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Why Checking Your Insurance Portfolio Regularly Could Be the Key to a Secure Future

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Why Checking Your Insurance Portfolio Regularly Could Be the Key to a Secure Future
January 27, 2025

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Back in the 1900s, the unsinkable Titanic set sail on its maiden voyage, equipped with the best technology of its time. But there was one critical oversight—lifeboat capacity. While the ship carried insurance, the lifeboats couldn’t accommodate all passengers. The result? A tragedy that could have been mitigated with regular reviews and updates to safety standards.

Now, while your insurance portfolio isn’t about lifeboats, the principle remains the same: you don’t want to discover gaps in your safety net when it’s too late. Have you ever stopped to think about your insurance coverage? Maybe you signed up for a policy a few years ago, and it’s just been ticking along without much thought. But what if that policy isn’t quite enough any more? Life moves fast, and the needs you had when you first got your insurance might look very different today.

Just like you keep an eye on your bank balance or update your wardrobe from time to time, your insurance portfolio needs a regular check-up too. It’s not just about having insurance—it’s about having the right insurance, at the right time, for the right reasons.

Life changes, so should your insurance

Think about all the major milestones you have experienced over the years. Perhaps you have married, had children, bought a house, or switched jobs. These life events bring new challenges and, often, new financial responsibilities.

When those changes happen, the insurance policy you took years ago may no longer suit your current situation. For example, a single person with a small apartment might not need the same level of life insurance as a couple with two kids and a home loan. Similarly, if you have recently started a business or received a promotion, your coverage might need to be adjusted to match your income and lifestyle.

The key takeaway here is simple: life changes, and so do your insurance needs. By reviewing your policies at least once a year, you ensure your coverage keeps pace with your evolving circumstances.

Under insurance: Silent threat

Here’s something to think about: What would happen if something unexpected came up, and your insurance didn’t cover all the costs? Being under-insured is a risk many people don’t realise they’re taking until it’s too late. Even though there are crores of life insurance policies, India as a country is deeply under-penetrated. One of the reasons is under-insurance.

Let’s imagine for a moment. You meet with an accident or faced with a health crisis, but the insurance you have is no longer enough to cover the medical expenses. That could lead to a financial nightmare. Or maybe your life insurance isn’t enough to cover your family’s living expenses, leaving them in a difficult position.

That’s why checking your coverage regularly is so important. You need to be sure that your insurance is keeping up with your current life stage, so you are always protected—no matter what life throws your way.

Big life events, big insurance decisions

It’s easy to forget  about your insurance until something big happens in your life. But that’s when you need your policies to work the hardest. Let’s look at a few life events that should make you think twice about your coverage.

Marriage or divorce: When you get married, your priorities shift. Suddenly, your spouse depends on you in new ways, and your life insurance should reflect that. On the other hand, after a divorce, you might want to change your beneficiaries or adjust the coverage based on your new financial situation.

Having children: Parenthood is one of the biggest reasons to review your insurance. With a new little one depending on you, it’s crucial to have the right life insurance to provide for them in the future. Think of investing in a savings plan or children’s plan that can provide life cover and set up a corpus for their future needs.

Buying a home: A home loan is a big financial responsibility. If something happens to you, your life insurance should be enough to cover that. So, reviewing your policy when you buy a home is a smart move. After all, you don’t want your loved ones to bear the burden of your home loan or the EMIs.

Think of retirement: Once you retire, the flow of income from your salary comes to a halt. While you may feel that you have invested some money for your future, will it be enough considering the rising inflation and cost of living? Consider how much you would need to live comfortably. An investment in ULIPs may be able to help generating income as the returns are market linked and it provides life coverage as well.

How inflation affects insurance coverage

You might not realise this, but inflation can slowly erode the effectiveness of your insurance. Here’s how: over time, the value of money decreases, meaning your policy might not cover as much as it did when you first took it out. Today, inflation is easily 5-6% annually*. So, account for this when you maintain life insurance coverage. Medical expenses, in particular, rise faster than inflation. So, your health insurance might need a little boost to keep up.

A regular review will help account for these inflationary pressures, so you are not caught off guard when your insurance starts feeling inadequate. Adjusting for inflation is a simple but crucial step in keeping your coverage relevant.

Insurance as investment in your future

Insurance isn’t just a safety net. It’s also an investment. Over time, certain insurance plans can grow in value, especially if you have chosen policies with a long-term benefit like life insurance with bonuses or returns.

The peace of mind that comes from knowing your family is financially secure is priceless, but the icing on the cake is when you know there’s also the potential for financial growth, too. By reviewing your portfolio, you ensure that you are getting the best out of your policies. You might discover new benefits, add riders to enhance your coverage. You could even consolidate policies for better returns.

How to check your insurance portfolio

Not sure where to start? Here’s a simple guide to help you get going.

Keep policy documents handy: Organise all insurance documents in physical and digital format. Use a home folder and back up with scans on your phone or cloud for easy access anytime.

Review coverage amounts: Is your insurance still enough to cover your needs? Don’t forget to factor in inflation, healthcare costs, and any new financial responsibilities.

Check fine print: Make sure you are clear on the terms and conditions of your policy. If there’s anything you don’t understand, get in touch with your insurance provider.

Update beneficiaries: Life events can lead to changes in who should be the beneficiary of your insurance. Make sure these details are up to date.

Look for gaps in coverage: If you notice areas where your insurance isn’t quite sufficient, take steps to fill those gaps. Add riders for accidental death, critical illness, disability etc. to the coverage.

Conclusion

Regularly reviewing your insurance portfolio is one of the best ways to protect your future. By keeping it up to date, you ensure that your coverage is always aligned with your changing life, protecting your loved ones and your peace of mind.

So, take the time to check in with your insurance once a year. It’s a small investment of time that can make a world of difference when life’s unexpected events come knocking.

Source

* https://tradingeconomics.com/india/inflation-cpi

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ARN: ED/01/25/20505

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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