Life is unpredictable and can be full of unexpected twists and turns. By ensuring that you review your income protection insurance cover regularly, you can help to protect your financial security and your peace of mind.
In this article, we are going to remind you about income protection insurance and why it is important, explore the importance of regular cover reviews and give you some recommendations of how often you should review your cover.
What is income protection insurance?
Income protection insurance is an insurance policy that provides you with a regular stream of income (a percentage of your monthly wages) if you are unable to work due to illness or injury. This regular income will continue either for an agreed period or until the policyholder retires or they are able to return to work.
Why are regular income protection reviews necessary?
It is essential to regularly review and update your income protection insurance policy to ensure that it is still meeting your requirements. Changes to your personal circumstances, such as a career or relationship change can affect your needs - which can have an impact on the amount of cover you need and the waiting period you want.
Neglecting to review your policy can lead to cover gaps that only become apparent when you need to make a claim. This could lead you to be financially vulnerable during a period of uncertainty.
How often should you review your cover?
We recommend that your income protection insurance policy should be reviewed regularly, but what do we mean by “regularly” exactly?
At the very least, you should review your policy in the event of any major life events, such as:
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Marriage: Getting married can have significant effects on your policy. For example, your financial dependence could impact the amount of cover you need.
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Divorce: On the flip side, if you are going through a divorce, you may want to adjust your cover amount to reflect being a single individual.
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Buying your first property: Buying your first property or moving house will require you to, at the very least, update your policy details to include your new address, but you may also want to amend your cover amount to fit your new bills and mortgage.
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Remortgaging: If you’ve changed your monthly mortgage payments, you may want to amend your cover amount to suit these new bills.
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Career changes: Career changes such as getting a new job, getting promoted, or becoming self-employed will require adjustments to your income protection policy - will you now have cover provided by your employer, has your income increased… These are changes that could impact your policy.
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Significant income changes: Significant changes to your financial situation or income will mean you need to adjust your cover to fit your new requirements.
On top of this, we also recommend you review your policy every year and ensure that the policy still meets your needs and reflects your financial and personal circumstances..
Regular reviews also help remind you of any exclusions or limitations in order to prevent surprises during claims.
The risks of neglecting regular reviews
As we’ve mentioned above, regular reviews of your income protection policy are crucial to ensure that your cover continues to meet your requirements and is fit for purpose. The risks of not doing this can include:
How to review your income protection insurance
Reviewing your income protection insurance is simple, but involves several key steps to ensure that your cover meets your current needs and circumstances. Start by gathering all of your policy documents, including the original policy and any recent statements or letters from your insurer. This will provide a clear picture of your existing cover.
Next, verify that the benefit amount and terms are sufficient to cover your current requirements. Make sure you have a clear understanding of the policy terms and conditions, including the waiting period, exclusions, and any specific requirements for making a claim.
Ensure that your personal information, such as your address and contact details, is up to date. An accurate record helps the benefits to be paid without problems. Additionally, compare your current premiums with your budget to evaluate if the cost of your policy is still affordable given your financial situation.
If needed, consult with a financial adviser to get advice and help interpret more complex terms and ensure your policy aligns with your overall financial plan. Document any changes you decide to make, keeping copies of all correspondence and updated policy documents.
By following these steps, you can ensure that your income protection insurance remains relevant to your current needs.
How Wiltshire Friendly can help
Wiltshire Friendly is a specialist income protection provider that offers products to individuals, employers and amateur, semi-professional and professional sports players who want to have a financial safety net in place in case they lose their income due to illness or injury.
To make a claim, review your existing policy, apply for increased cover or discuss your individual requirements, please contact us today.