Ah, insurance, the dry and sometimes dull topic that is important to discuss, essential to evaluate, and yet often remains stagnant and outdated.  In fact, after the initial insurance policy purchase, many people go on to automatically pay their premiums year after year, without so much as cracking open their policies again.

While everybody knows that insurance is a necessary expense (and often a legal requirement) that protects assets, health and a standard of living, not everybody realizes that their policies and coverage should be regularly reviewed. And let’s face it, it’s easy to grow complacent with our busy lives and everyday responsibilities.

However, we would like to explain why prioritizing an annual review of your insurance policies is essential, and it all comes down to the fact that circumstances in your life change. Your family may have a new addition, or perhaps your kids have grown and moved out.  Maybe you moved to a large city, or you bought that hobby farm you always wanted. Growing older may see you or a loved one suffering from a chronic health condition. Whatever changes in your life have occurred, it is essential to make sure you have the protection you need without spending more than you should.

Let’s break it down by the four most common insurance types.

HOMEOWNERS INSURANCE

When reviewing your homeowner’s insurance policy, ask yourself these questions:

Will my current coverage rebuild my house today?

Thanks to inflation and the changing housing market, the cost of replacing your home could change from the time you first bought your policy. If you don’t review your coverage, you may end up with a gap in coverage and should the worst happen, not have enough resources to replace your home. Also, keep in mind any improvements you have made and how they may impact the cost of replacing your home. Have you renovated or upgraded? Finished your previously unfinished basement? All of these things will affect how much coverage you need.

Have I made changes that will qualify me for discounts or increase my coverage needs?

Have you installed a security system, smoke/gas alarms, or an impact resistant roof? You may qualify for a discount! Any improvements you have made, especially ones that create a safer environment, may be eligible for a discount. However, all insurance companies are different, so call your agent and ask for a list of discounts they offer.

Conversely, if you have made changes that require additional coverage, or other risk consideration that requires more liability coverage, such as adding a swimming pool, let your agent know and make sure you are fully covered and protected.

Have I acquired any valuables that would require extended coverage?

While your existing policy should provide standard coverage for your home and belongings, you may have acquired additional valuables that require extra coverage consideration. Jewelry, art, electronic and office equipment, etc. should be considered when evaluating your extended coverage needs.

LIFE INSURANCE

When reviewing your life insurance policy, ask yourself these questions:

Do I still need the same amount of coverage?

Have your children grown, or have you paid down debts such as mortgages and loans? Over time, your coverage requirements may be less, and if they are, you can reduce your coverage and save on your premiums. Conversely, if you have incurred more debt, or your family has grown, or your standard of living has become higher thanks to a more substantial income, you may consider increasing your coverage amount.

Has my health changed?

As you likely found out when purchasing your policy, premium amounts vary widely based on your age, health, and lifestyle. If your health has gotten better, and chronic ailments that were once an issue are now well-controlled (or maybe even gone), you may now qualify for a lower rate class. Same if you have quit smoking. Conversely, if over time, you have developed a severe health condition that would prevent you from getting a new policy, you should explore your policy’s conversion options. Many term life insurance policies can be converted to permanent coverage without health-related questions, tests, or exams.

AUTO INSURANCE

When reviewing your car insurance policy, ask yourself these questions:

Have I had a significant life event such as marriage or divorce?

Car insurance premiums are generally lower if you are older and married, so birthdays and matrimony are likely to save you money, but getting a divorce may make your premiums go up. Be sure to keep your agent apprised of any significant life event.

Am I adding a new driver?

Adding a teen to your policy can be expensive, but you can still find ways to save. Assigning your teen to only one car, preferably a little older and used, with an excellent safety rating, will give you better rates. Also, teens that keep B average or higher grades usually cost less to insure.

Have there been any changes in employment or residence?

If you’ve changed your place of employment, and the commute time is considerably shorter, or if you telecommute, you may save money on your insurance premium. Same if you are due to retire. The number of miles you drive a day, and where you drive to, directly impacts what you pay for insurance. Be sure to update your agent with these changes.

Where you live will also affect your premiums, with urban or densely populated areas usually paying more. Crime rate and weather will also have an impact on what you pay.

HEALTH INSURANCE

When reviewing your health insurance policy, ask yourself these questions:

Have there been any changes to the covered benefits, excluded benefits, coverage amounts, or costs of my current plan?

Review your covered and excluded benefits, coverage amounts and costs, including premiums, deductibles, copays, and out-of-pocket maximums. Determine if your plan still meets your needs.

Often, when we are younger, healthier, and single, consumer choice and streamlined health insurance with smaller premiums make sense because we don’t visit doctors all that often. As we age and build families, our coverage needs may change, and higher premiums for more extensive coverage may actually save money in the long run.

Am I happy with the professionals and facilities in the network?

If your insurance requires in-network professionals and facilities, make sure you are happy with your options and that there are necessary specialists and critical facilities close to you, such as an in-network hospital.

Does my plan cover my prescriptions? Are my medicines readily available?

Verify that your plan covers any prescription drugs that you may need and that there is an approved pharmacy nearby or a mail-order option.

Is there a plan available that better meets my needs?

Whether privately insured or insured through your employer, look at different health plan options and compare them to determine if there is a plan that better meets your needs.

FOR ALL INSURANCE – ALWAYS KEEP PERSONAL INFORMATION CURRENT

For all insurance policies, if any of your personal information has changed, including a new address, a different bank account, a new phone number, or a change in beneficiaries; alert your agent. This is extremely important because should there be a problem with your payment, or if your policy is nearing expiration, your agent will be able to contact you quickly and avoid a lapse in coverage.

Insurance is the protection we pay for but hope we never have to use. An annual review of your insurance policies is the only way to make sure you are adequately protected without overpaying.