
The Importance of Reviewing and Adjusting Insurance Coverage Annually
As we step into a new year, there’s a lot on everyone’s mind—new goals, fresh beginnings, and, of course, resolutions. While many people focus on health, fitness, or financial goals, an essential yet often overlooked resolution is reviewing and adjusting your insurance coverage.
Insurance provides a financial safety net for unexpected events, from health issues to car accidents and even home damage. But as your life changes, your insurance needs may change too.
“Reviewing your policies at the start of the year is a smart way to ensure you’re adequately covered without paying for unnecessary coverage. This proactive approach could save you money on premiums, while also helping you secure the best protection for your current situation,” advises Charles Castro, Senior Vice President – Investments at David Lerner Associates, Inc.
Why an Annual Insurance Review is Essential
In a survey by Trusted Choice, the national consumer brand for Independent Insurance Agents & Brokers of America, 86 percent of respondents felt confident about their policy coverage. However, when asked detailed questions, many were either mistaken or uncertain about the specifics.
Life doesn’t stand still, and neither should your insurance.
As the years pass, changes in your personal circumstances can impact your coverage needs. Several factors can affect your coverage needs and your annual premiums. When you review your policies annually, you ensure that your coverage remains aligned with your current needs, providing peace of mind in case the unexpected happens.
An annual review also helps you identify any areas where you may be over- or under-insured. Over-insurance means you’re paying higher premiums for coverage you may not need, while under-insurance leaves you vulnerable to unexpected expenses. By evaluating your policies, you can make sure you’re covered just right.
Life Changes That May Require Insurance Adjustments
Certain life changes are significant enough to warrant adjustments in your insurance policies. Let’s take a look at a few scenarios:
- Marriage or Divorce: Major life events like marriage or divorce impact more than just your personal life. They can affect your health, auto, life, and home insurance policies. For instance, you may need to add a spouse to your health plan, combine auto policies for a better rate, or remove a partner from your coverage.
- Birth of a Child: A new addition to the family comes with increased financial responsibilities. Reviewing your life and health insurance coverage to ensure your child is protected is essential.
- Purchasing a New Home/Car: A new home will require homeowners’ insurance, and a new car will need updated auto coverage. Ensure that your policies reflect the value of these new assets.
- Job Changes: A new job may come with its own insurance benefits or may change your income level. Adjust your coverage accordingly to protect your assets.
Reviewing Common Types of Insurance Coverage
When doing an annual review, consider evaluating the primary types of insurance you have.
Here’s a quick look at what to consider for each type:
- Health Insurance: Health needs can change significantly year-over-year. Check for any updates in your plan, new benefits, or changes in premiums. Consider adjusting your plan based on your health outlook for the coming year.
- Homeowners or Renters Insurance: Property values and replacement costs fluctuate over time. Ensure that your policy still provides adequate coverage for your home and its contents. If you’ve renovated or added valuable possessions, you may need more coverage.
- Auto Insurance: With changing driving patterns and new car technology, your auto insurance needs might change. Look for potential discounts for safe driving, lower mileage, or bundling policies with the same provider.
- Life Insurance: If you’ve recently had a child, taken on a mortgage, or started saving for retirement, it may be time to update your life insurance coverage. You want to make sure your loved ones are financially protected if anything were to happen to you.
Reviewing each policy type ensures you’re neither overpaying for unnecessary coverage nor underinsured against potential risks.
Potential Ways to Save on Premiums
One of the best parts of an annual insurance review is discovering opportunities to save on premiums.
Here are some common ways to potentially reduce your insurance costs:
- Bundling Policies: Many insurance providers offer discounts if you purchase multiple types of insurance (like auto, home, and life) from them. Combining policies can be a convenient way to save.
- Increasing Your Deductibles: A higher deductible generally means lower premiums. If you can afford a higher deductible, this adjustment can lead to significant savings, especially on auto and homeowner’s insurance.
- Loyalty and Safe-Driving Discounts: Some insurance companies reward loyal customers or those with clean driving records. Ask your insurer about any loyalty or safety-related discounts.
- Updating Your Coverage Based on Usage: For example, if you’re driving less than you used to, you may qualify for a lower premium with some auto insurance providers. Some health plans also offer discounts if you maintain a healthy lifestyle.
Taking advantage of these savings can help reduce your monthly expenses without sacrificing the protection you need.
Consulting with a Financial or Insurance Professional
Insurance can be complex, and policies often contain fine print that’s easy to overlook. If you’re unsure about your coverage or potential savings, consulting with an experienced investment counselor can be beneficial. They can provide personalized advice, helping you understand if your current policies meet your needs and how to adjust them if they don’t.
An expert can also explain policy terms and guide you in choosing the best options. Working with a professional ensures that you’re not making any costly mistakes in your coverage.
How Current Is Your Household’s Insurance Coverage?
Reviewing and adjusting your insurance coverage annually is a proactive step toward financial well-being. Life changes, policy updates, and market fluctuations all play a role in determining the best level of protection for you and your family. By taking the time to review your policies each year, you not only protect yourself from unforeseen costs but also ensure you’re getting the best value for your premium dollars.
Are you ready to take control of your financial protection this year? Start your 2025 with a thorough insurance review to ensure you have the right coverage for your needs. At David Lerner Associates, we’re here to help you navigate your options and find the coverage that best suits your life stage and goals.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.