Add up the number of insurance policies you have, and you're likely to find several types of insurance being paid to at least a few insurance companies. When you manage different insurance policies and pay multiple premiums, it can be easy to lose track of how much you're paying out and whether your insurance coverage still fits your changing life needs.
An annual insurance review can make a big difference. Insurance needs can change over the years. Reviewing your policies with your insurance agent safeguards you against overpaying or being underinsured.
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Insurance Review Policies
Americans spend a lot of money on insurance products and premiums. The U.S. health insurance industry had net earnings of $31 billion in 2020, and the insurance industry wrote $1.28 trillion in premiums. Most people have at least five types of insurance:
- Health insurance
- Homeowners insurance or renters insurance
- Auto insurance
- Life insurance coverage
- Long-term disability insurance
And that's not all. Some people also carry policies for long-term care, identify theft, liability coverage, pet insurance, private mortgage insurance, extended warranties, small business insurance, dental insurance and an umbrella policy.
In short, there can be a lot of insurance products in your name that could use a regular check-in for accuracy. You'll want to make sure you include all of them in your annual policy review.
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Benefits of an Insurance Review
While an annual review can certainly turn up places you can save money with a lower premium, the most important reason for a review is to review your insurance coverage. Make sure the amount of coverage you carry could replace your home and property and take care of your loved ones in the event disaster strikes.
For instance, reviewing your homeowners policy or renters insurance every year allows you to make sure you could rebuild the home you own and replace your personal property, whether you rent or own.
Over the years, you may make improvements to your home or acquire new possessions that weren't covered or considered in your original home insurance policy. When the costs of building materials go up, so will the replacement cost of your home; make sure this is accounted for in your homeowners coverage.
Perhaps you've invested in an alarm system for your home or vehicle that might reduce your monthly insurance premium.
Life insurance policies are another example. Your needs change over time, and the original policy purchased years ago may not have the right benefits for your situation today.
In short, there can be a lot of insurance products in your name that could use a regular check-in for accuracy.
Every policy you have can benefit from a review with your insurance agent or insurance company representative. It allows you to ensure your insurance costs are in line, and a review also offers the opportunity to purchase additional coverage or take advantage of bundling.
When to Review Insurance Policies
Every year, before your policy renews, do a review. In addition, it is important to review all of your insurance policies and coverage when you experience life changes.
If you get married, have a child, purchase a new home, accept a new job, lose a job, have a significant change in health, get divorced, suffer the death of a family member, inherit valuables or experience other major events, it impacts your overall insurance picture.
Getting married or having children impacts the death benefit on your life insurance policy; you want to make sure that it is up to date, along with anything else that secures the future of your growing family.
Certain types of insurance only allow for policy changes after major events, called "qualifying life events." For instance, this is when your health insurance policy may allow you to make a change outside of open enrollment.
Regarding health insurance, even though you may not be able to make changes to your policy outside of open enrollment or a major life change, your annual review should still include your health care coverage. How did your policy cover your needs this year, and what would you change in the coming year?
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Orchestrating an Annual Policy Review
Sometimes your insurance agent will contact you to review your insurance policy. But this isn't always the case, and it doesn't happen every year. You can lead this process by setting aside one time each year to review all of your different insurance products and types of policies with the insurance companies or providers. Once it's done, you can rest easy for the year, knowing your coverage and insurance costs are in line with your current needs.
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- Texas Department of Insurance: Make the most of your annual insurance review
- Illinois Department of Insurance
- Consumer Financial Protection Bureau (CFPB): Shop for Homeowner's Insurance
- Insurance Information Institute: Life Insurance Basics
- Centers for Medicare & Medicaid Services: Health Insurance Marketplace
- Consumer Reports: CR's Guide to Health Insurance
- Insurance Information Institute (III): Facts + Statistics: Life Insurance
- Insurance Information Institute: Facts + Statistics: Industry Overview
- Insurance Information Institute: How Much Homeowner's Insurance Do I Need?
- Insurance Information Institute: How Often Should I Review My Policy?