As you know, life changes on a constant basis and therefore you need to review your insurance regularly. I would recommend annually. I will list various types of insurance you might have and what areas you need to review:
This is to provide replacement income for a family for a period of time in the event of the untimely death of the life insured. It is also to clear any debt in the event of the death of the life insured. If the life insured’s income has increased, increasing his or her life cover is recommended. In addition, should the household take on more debt, life cover should be increased to cover this. Conversely if debt has been reduced or cleared, life cover can be reduced or cancelled. Also, when the family has sufficient investment assets to provide an ongoing income, life cover can be cancelled.
2. Income protection
Should one’s income increase, this cover should be adjusted accordingly. Typically, lifestyle expenses increase when income increases, although debt levels can as well. Income protection can be reduced when there is sufficient investment income available. Should income protection become too expensive under a stepped premium, one can look at increasing the waiting period and or reducing the benefit period or finally reducing the weekly benefit.
3. Health insurance
Children can be added to a parent’s policy. Premiums which increase with age and medical inflation can be kept in check by increasing the excess on the policy. I generally recommend just major medical cover, which keeps premiums down.
4. Car insurance
I recommend you find out the replacement value of your car (phone a dealer) each year and adjust your cover accordingly. You should carry comprehensive car insurance always and only 3rd party cover if the vehicle is very inexpensive. Children who are allowed to drive your car need to be added to the policy.
5. House insurance
It is important that your insurance cover reflects the cost of rebuilding your house. Make sure to obtain a realistic building cost per square metre and multiply this by the size of your house. Be sure to add in an amount for any deck or separate garage. To keep your premiums down, look to increase your excess. It is unlikely that you will have a small claim, however premium payments are ongoing.
6. Contents insurance
Typically, the only events that will destroy your entire contents will be a fire or a flood, which are fairly unlikely events. Again, on this basis you can keep your premiums down by having a higher excess. Every couple of years, with the assistance of a guide that insurance companies provide, you should total up the value of your contents to make sure the sum insured is realistic. I recommend you obtain quotes for all your general (car, house contents) insurance with one company as they can offer discounts for multiple covers. Should you feel you need to reduce your premiums, one option of course is to reduce your level of cover.