We all want to feel secure knowing that the people and things we love most are protected. Life moves incredibly fast, and the safety net you put in place a few years ago might not match the life you are building today. Taking a little time to align your protection with your current world brings true peace of mind, allowing you to focus on enjoying your journey.
What does an insurance review entail?
An insurance review is a routine checkup for your financial safety net. It involves looking over all your existing policies, taking stock of recent life changes, and evaluating your coverage limits, deductibles, and premiums.
During this process, you will also look closely at policy exclusions or limitations. It is an excellent opportunity to spot potential discounts and cost-saving measures that keep more money in your pocket. Ultimately, adequate coverage protects you and your family against potential lawsuits, legal claims, and unexpected disruptions.
What should I consider when reviewing my insurance?
When you dive into your insurance review, keep these foundational elements at the top of your mind:
- The right level of protection: Examine each policy's deductibles, limits, and premiums to make sure they fit your current financial situation.
- Life milestones: Consider changes like getting married, growing your family, moving to a new home, or launching a business. If you just experienced a major milestone, bumping up your coverage limits is often worth it.
- Uncovered risks: Review exclusions and limitations so you know exactly what is not covered, allowing you to find proactive ways to reduce those risks.
- Bundling opportunities: Ask your providers about discounts for combining multiple policies or implementing other cost-saving strategies.
Your ultimate checklist for reviewing insurance
Regularly tracking your coverage is the best way to safeguard your property, possessions, and loved ones. Here is exactly what to evaluate, broken down by asset type.
Homeowners policy (or renters)
To kick things off, grab your policy's declaration page. If you cannot find it in your files, simply request a copy from your insurance company. This page gives you a clear summary of your current protection. Keep an eye out for these common triggers that require an adjustment:
- Property value shifts: If your home has appreciated, you need to adjust your coverage. Do not just rely on the appraised market value. Instead, use the per-square-foot replacement cost in your neighborhood as your benchmark, which you can get from your local Home Builders Association.
- Renovations: Remodeling projects can change your home's total value. Some policies will not cover remodeled spaces without proper documentation, even if your total home value stays relatively steady.
- Valuable new possessions: If you recently acquired high-ticket items like jewelry or high-end art, add them to your policy so they are fully protected.
- Gaps in coverage: Consider adding umbrella insurance to supplement your standard homeowners policy. This offers an extra layer of protection for worst-case scenarios, such as serious injuries caused by negligence on your property.
Don't forget to ask about safety discounts. You might qualify for lower premiums if you have added risk-mitigating features like a new security setup or a fire-protection system.
Life insurance coverage
A regular review ensures you maintain the right type and amount of coverage to take care of your family. Because life insurance comes in many forms, including term, universal, and permanent life insurance, you need to evaluate each policy individually.
Make sure to look at your coverage if you experience any of these major events:
- A job promotion or career transition
- Welcoming a new baby
- A death in the family
- Marriage or divorce
- Shifts in your overall health or lifestyle
When you sit down to review these, have your medical records and your beneficiaries' Social Security numbers handy. Be sure to check your beneficiary designations regularly, too. These specific designations hold priority over instructions left in a will or trust.
Health insurance
Your personal health changes aren't the only reason to check your health coverage. Shifts in state and federal laws can also impact your care. Ask yourself these key questions:
- Is my primary doctor still in the plan's network?
- What are my premiums, deductibles, and maximum out-of-pocket expenses?
- When does the next open enrollment period begin?
- Does the formulary cover all of my current prescriptions?
- Does this specific plan allow me to make Health Savings Account (HSA) contributions?
- Am I turning 65 soon? If you are, it's time to start looking into Medicare benefits.
Your choices between an HMO or PPO, along with your personal healthcare needs, will influence how you weigh these answers. For example, you might be totally comfortable accepting higher out-of-pocket expenses if it means keeping access to your favorite primary care physician.
Auto insurance
Auto insurance costs shift based on your vehicle's current value and your personal driving record. Interestingly, making moves to improve your credit score can actually lower your premiums.
You can also lower your costs by looking at these factors:
- Updated health insurance: If your health coverage is robust, you might be able to decrease the medical coverage portion of your auto policy.
- Bundling your protection: Combining your auto and homeowners insurance can save you money, as insurance companies view homeowners as lower-risk clients.
- Your zip code: The neighborhood you live in, and even where you park your car at night, can influence your premium rates.
- Driver ratios: If you have more drivers than vehicles in your house, does everyone really need to be listed as a primary driver? Changing a few family members to "occasional" status can yield helpful savings.
Other types of insurance to review or consider
While keeping your health, life, home, and auto policies updated is vital, don't overlook these other important forms of protection:
- Long-term care insurance
- Disability insurance
- Pet insurance
- Umbrella policies
How often should I review my insurance coverage?
You should review your insurance policies at least once a year. Taking this proactive step ensures you always have the right amount of protection for whatever twists and turns come your way.
With that said, if you experience a major life transition, like getting married, welcoming a child, or grieving the loss of a partner, don't wait for the annual mark. Review your insurance coverage right away.
Finding that perfect balance between protecting your world and keeping your premiums affordable takes a little focus, but it is entirely doable. With a bit of intentionality, you can move forward knowing your family is properly protected in every facet of life.
The Facet difference
At Facet, we look at your financial life through a wide-lens camera. We believe that managing your money is about supporting your life journey and honoring your values, not just checking boxes on a static form.
That is why we do things differently. Instead of charging you a percentage of your assets, we use a transparent flat-fee structure. Our advice is objective, and we are focused on what is best for you. You work alongside a CFP® professional who helps you build a fluid financial roadmap. From analyzing your insurance policies to helping you save for retirement, we help you turn your money into a tool to live your absolute best life today while feeling incredibly confident about tomorrow.
