2022 has only just begun, and it's not too late to review your insurance. As we know, it's not only income and expenses that need to be reviewed regularly. Insurance policies also need to be evaluated so that your protection needs in life can be better met.
An evaluation is a way to assess whether what we have been doing all along is still right and appropriate. The same applies to insurance: are you sure you've chosen the right insurance product, or do you need to add another policy for double protection?
Things to Do When Reviewing Your Insurance
In principle, there is no specific rule requiring you to review your insurance policies. However, if you don't, the benefits you receive are likely to be less suited to your needs.
Here are some things you should do to review your insurance:
1. New Family Members
Over the span of several years, you may go through various life stages, such as getting married, having children, raising children, or losing a family member. This naturally affects the number of family members who depend on your income.
In other words, it also affects the sum insured on your life insurance and the health benefits in your health insurance. If your family grows, you need to add to your policies so the amount can support the whole family's needs if you pass away.
The same applies to health insurance: you may need to increase medical benefits so that all family members are covered. Conversely, if your family shrinks, whether through divorce or death, you should also review your policies.
Assess whether your current life insurance policy truly matches your needs. If the policy is larger than what you need, you may reduce its benefit level.
Also make sure the life insurance beneficiary is a living family member, is legally an adult, and is legally related to you by blood.
2. Consider Your Financial Capacity
Everyone's career or business goes through ups and downs. This naturally affects your financial capacity from year to year. That's why you should also consider your financial capacity when reviewing your insurance regularly.
When your income increases, there's nothing wrong with considering adding more insurance protection. If your business is slow, reducing your protection temporarily is also fine until your financial capacity recovers.
One thing is certain: keep setting aside funds for insurance regardless of your financial situation. Financial advisors recommend allocating at least 10% of your income toward insurance premiums.
Knowing whether the funds you allocate are sufficient can help you avoid a situation where your protection needs exceed the benefits you get from insurance.
3. Debt Position
Another item to review is your debt position. Make sure all the debts you have can be covered by life insurance. This matters so that you don't leave debts behind to your heirs after you pass away.
If you borrow from a fintech company or a bank loan, your loan will be protected by credit life insurance. However, if you borrow money from colleagues, relatives, or investors without credit life insurance, you should buy a standalone life insurance policy.
Choose insurance large enough to cover your total debt. As time passes, your principal debt will decrease, so you may be able to reduce the life insurance policy used to protect that debt.
4. Consider Hospital Cost Inflation
Every year, hospital costs rise by an amount that cannot be predicted. It's important to review this so you can receive good health insurance benefits in the future.
The health insurance policy you bought five years ago may have offered adequate inpatient benefits. For example, five years ago a Class I inpatient room could be obtained for Rp 500,000.
At that time, the policy may have made sense. Today, however, Class I inpatient rates can reach millions, so they cannot be compared with room prices from five years ago.
That is why it's very important to check how inpatient room prices have changed. Then, adjust your health insurance benefits to account for medical cost inflation. This helps you minimize the risk of being dissatisfied with healthcare services if you ever need them.
5. Lifestyle Changes
Changes in lifestyle can be a consideration when reviewing your insurance policies regularly. You may now be more prone to work-related stress because your time for exercise has become very limited.
In addition, most of the food you eat may be junk food, which can lead to being overweight.
If left unchecked, this can trigger chronic diseases in the future, so you need to make sure your insurance gives you better protection in light of your lifestyle changes.
Another lifestyle consideration is the facilities you want to get from your insurance.
Perhaps 10 years ago, when you first had health insurance, you didn't mind receiving Class III inpatient benefits, where one room is shared by several patients. As time goes on and your financial situation improves, things change.
You may want better healthcare facilities, such as a VIP room with a luxurious package of amenities. In that case, you should take this into account when reviewing your health insurance.
6. Premium Payment Period
As a rule, a client should match premium payments to their financial situation. For example, when your business is doing well, you may choose a monthly premium payment period.
However, if your business is weakening and your income becomes irregular, consider a payment period of three months, six months, or even annually.
It's worth noting that premiums paid quarterly, semi-annually, or annually will be higher in total than if you pay monthly.
This review is very important so that your cash flow stays under control each month. That way, you can use your cash for more urgent everyday needs, while your insurance policy remains active according to the extended payment period.
Before burdening your relatives, take the initiative to prepare for these costs. Having death insurance is one solution, since the benefits will help your heirs arrange a funeral without placing a financial burden on them.
From the explanation above, it's clear that reviewing your insurance regularly is very important so you can adjust your premiums or get the most out of the insurance you've bought.
dev_kamboja
The Kamboja team writes guides on bereavement, funeral arrangements and funeral planning to help families in Indonesia.
