Life insurance is a key element of any financial plan, and we recommend it for most of our expatriate clients. However, lives evolve so you can’t just take out a policy and forget about it. We look at why and how you should review your life insurance coverage.
Life insurance is essential for expats in Asia
Life insurance is one of the backbones of any financial plan providing financial security and protection to your loved ones if anything were to happen to you. In the event of your unexpected death, life insurance ensures that your family will be financially protected and not put in a position where they must make lifestyle compromises. A life insurance payout can be used to cover outstanding debts, mortgage payments, education expenses, and funeral costs, and to maintain living standards.
In addition, it can act as an estate planning tool to preserve wealth and assets for future generations enabling the tax-effective transfer of financial resources.
What is a life insurance review?
This is a simple process that can be carried out with your financial adviser to ensure that the life insurance policy you have in place is fit for purpose and continues to meet your needs. During the review, they will:
- Ensure you have sufficient cover to meet your financial obligations
- Check that your beneficiaries are up-to-date and reflect your current wishes
- Evaluate the performance of any investment components of the policy
- Look at premiums and check they are affordable
- Review the terms and conditions of your policy including exclusions and optional benefits
- Compare your policy with other products on the market to ensure you are getting the best deal in terms of coverage, benefits and cost
Why do I need to review my life insurance policy?
As lives evolve, financial obligations shift and change. By conducting regular reviews of your life insurance policy, you can ensure that it remains relevant, meets your evolving needs, and continues to provide the necessary financial protection for your loved ones in the future.
It is advisable to consult with a qualified insurance professional who can guide you through the review process and provide expert recommendations based on your specific circumstances.
Following the review, your adviser will make recommendations as to whether you should adjust or change policy, increase cover, modify the beneficiary or explore alternative options.
How often should I review my life insurance policy?
Even when life is uneventful, at Infinity we recommend a life insurance review at least once a year. However, there are certain life events that necessitate a review.
When should I review my life insurance coverage?
When you get married
Singletons may not need life insurance (although we often still recommend it) but once you have a spouse who depends on your income, it is imperative to get life insurance to protect them if you were to pass away unexpectedly.
When you have children
For many, this is the single biggest consideration when taking out life insurance. You should take out cover to help meet both the current and future expenses of all your children (including childcare, school fees and university fees) if you were no longer around to be the family breadwinner.
When your children come of age
Once your children become adults the need to protect them with life insurance may diminish although many people continue to use life insurance as a tax-efficient estate planning tool to pass on assets. Life insurance is also often used to provide liquid funds in the event of a death to pay death taxes, funeral expenses and other immediate costs which need to be settled before probate is granted (a potentially lengthy process).
When you retire
If you retire debt-free and have a reliable source of income, life insurance may no longer be necessary, but many people use cash from their life insurance policies to meet expenses once they stop working.
When your beneficiaries change
It is important to make sure the beneficiary, or beneficiaries, of your life insurance policy, are kept up to date. If a beneficiary passes away, they will need to be replaced. Similarly, if you get divorced or add to your family, you may wish to add or remove a beneficiary.
If your income changes
A promotion and a salary increase may mean that your everyday expenditure goes up. For example, you may commit to a higher mortgage or more expensive schools for your children. These changes impact your life insurance requirements, so a review is necessary.
How to get help to review your life insurance
It’s not always easy to work out your life insurance requirements but our financial advisers have the expertise and experience to guide you and ensure that your cover is adequate for your needs, giving you peace of mind.
Why not contact us to arrange a review today?
A leading provider of expat financial services and wealth management services across Asia.