Review your insurance policies for the best deal

Think about the last time you looked at your insurance policies. If it’s been a while, you might be missing out on better coverage options or potential savings. Insurance isn’t a “set it and forget it” part of life; it’s something that benefits from regular attention. In this article, we’ll explore why it’s important to review your life, home and auto insurance policies, each of which has unique aspects that might need adjustment over time. Doing a thorough insurance policy review can help ensure you’re properly covered and potentially save money. Reviewing your policies regularly enables you to make the most of your coverage and keeps your financial protection up to date.

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Whole life insurance combines life insurance with an investment component.

• Coverage for life
• Tax-deferred savings benefit if premiums are paid
• 3 variations of permanent insurance: whole life, universal life and variable life include investment component

Term life insurance is precisely what the name implies: an insurance policy that is good for a specific term of time.

• Fixed premium over term
• No savings benefits
• Outliving policy or policy cancellation results in no money back

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What is an insurance policy review?

An insurance policy review is a thorough evaluation of your current insurance coverage to make sure it still meets your needs and offers the best value. This process involves examining the details of your policies, such as coverage limits, deductibles and premiums. The goal is to identify any gaps in coverage, potential overlaps or opportunities for savings. By regularly reviewing your insurance policies, you can make sure you are adequately protected and are taking advantage of any discounts or better rates that may be available.

When should I review my insurance policies?

Regularly reviewing your insurance policies is highly recommended to ensure you have the right coverage and are not overpaying. For life and home insurance, an annual review is often advised because significant life changes often occur within a year, such as getting married, having kids or home upgrades, all of which could influence coverage needs. Car insurance should be reviewed either annually or every six months, or whatever aligns with your renewal cadence. This frequency helps you stay on top of any changes in premiums, coverage needs or any new car insurance discounts you might qualify for.

Life insurance

“When you buy a life insurance policy, it’s tempting to set it and forget it,” says Admiral Brian Luther, President and CEO at Navy Mutual. “A life insurance policy can serve many functions, but it is, fundamentally, a tool to reduce risk for you or your family.” This can include covering funeral expenses, the costs of a child’s education or providing for a surviving spouse or other loved ones.

Luther emphasizes that reviewing your policy annually and after major life changes is a better strategy to ensure your loved ones are financially protected. “Your life insurance policy should be reviewed whenever your family changes — births, marriages, divorces, deaths — when something causes a big shift in your finances — mortgages, debt, inheritance, family medical needs — as you approach the end of your policy’s term, if your beneficiaries change or if you experience a change in health status.”

By keeping your life insurance policy up to date as your life changes over time, you can help ensure it continues to meet your evolving needs and provide the financial security your family depends on.

Home insurance

“It is generally a good idea to review your policy once a year,” says Stephen Crewdson, Senior Director of Global Business Intelligence – Insurance at J.D. Power. “Insurers typically renew homeowners policies annually and make changes to premiums, coverages, etc., at those times. You’ll want to ensure you understand the changes to your policy.”

He notes that in the J.D. Power U.S. Home Insurance Study, only 55 percent of homeowners completely understand their policy and what it covers. Even those who do might still benefit from a discussion with an insurance professional.

Reviewing your coverage limits, deductibles and endorsements with an agent can reveal opportunities to lower your premium. “Communicate with your home insurer whenever you make improvements to your house,” Crewdson advises. “You may find you can save after installing a new roof or after making other updates to your home.”

If you haven’t adjusted your dwelling coverage limit for a few years, you could be facing a significant insurance gap. According to an analysis by the Insurance Information Institute (Triple-I), replacement costs increased a cumulative 55 percent from 2019 to 2022 due to supply chain disruption, escalating costs of construction materials and labor shortages. Triple-I states that will take 10 years of normal inflation to absorb these cost increases. Since dwelling coverage is often partly based on the replacement cost value (RCV) of your home, you should consider reviewing your coverage to ensure it’s adequate for the current RCV.

Auto insurance

“We recommend policy review at least once a year or in accordance to your renewal cycle,” says Rajni Kapur, President and CFO of All Solutions Insurance. “This is a good time to review your coverage and/or shop around for a better price.” Kapur also suggests reviewing your policy during significant life changes, such as getting married, moving, changing jobs, adding vehicles or experiencing changes to your driving record.

“Policy renewal is a great opportunity to shop around and see if there are better pricing opportunities available with another insurance carrier and to make sure you are receiving all eligible discounts,” Kapur explains. These discounts can include good student discounts, anti-theft device discounts and low mileage discounts. Kapur also advises that in order to save money, “insureds can look into increasing their deductible or dropping comprehensive and collision coverage for older cars.”

How can I save money with a policy review?

Maximizing the value of your insurance policies isn’t just about having the right coverage. It’s also about making sure you’re not overpaying. Conducting a thorough policy review can help you identify areas where you can save money. Here are some effective strategies to consider when reviewing your insurance policies for the best deal:

1. Evaluate your coverage needs: Over time, your insurance needs may change. Perhaps your life circumstances have shifted, or you’ve made significant updates to your home. By reassessing your coverage, you can ensure you’re not paying for protection you no longer need.
2. Take advantage of discounts: Many insurance companies offer a range of discounts that you might not be aware of. During your policy review, ask your insurer about any available discounts. These can include bundling discounts for combining home and auto insurance, good student discounts for young drivers or safety feature discounts for homes equipped with alarm systems.
3. Adjust your deductibles: Increasing your deductible could lower your premium. If you have the financial flexibility to cover a higher out-of-pocket expense in the event of a claim, this can be a cost-effective way to reduce your monthly or yearly insurance costs.
4. Eliminate unnecessary coverage: Sometimes, policies include coverage that you might not need. For instance, if you no longer drive as much or have a secondary vehicle that is rarely used, you might decide to drop comprehensive and collision coverage, which could lead to significant savings.
5. Shop around: Even if you’re satisfied with your current insurer, it’s worth comparing rates from other companies. Policy renewal is an ideal time to shop around and see if you can get a better rate elsewhere. Just be sure not to cancel your existing policy until the new one is in place.
6. Review policy limits and riders: Make sure that your policy limits and any additional riders or endorsements still make sense for your current situation. This is particularly relevant for life insurance. For example, you may have a term conversion rider with an approaching expiration date and if you experienced an unexpected health crisis and want to take advantage of switching to a permanent policy without needing to prove you’re still insurable, you need to take those steps prior to the conversion expiry date.

How does bundling insurance policies benefit me?

Bundling your insurance policies is one of the most effective and common ways to save money. While life insurance premiums won’t be discounted directly, combining your life insurance with home or auto insurance from the same provider can still be beneficial. By doing so, you could receive a multi-policy discount that reduces your home or auto insurance costs.

When you bundle your home and auto insurance with the same company, many insurers offer a discount that significantly lowers your overall premiums on both policies.

Although life insurance itself doesn’t benefit from bundling discounts, having all your policies with a single insurer simplifies your insurance policy management. You’ll have one point of contact for all your insurance needs, making it easier to handle policies, payments and claims.

Insurance policy review checklist

Conducting a thorough insurance policy review is crucial to ensure your coverage meets your needs and offers the best value. Here are a few checklists broken down by policy type to help give you a better understanding of what to look for or certain scenarios that might require you to review your policy:

Life insurance checklist

• Job changes: Promotion? You might need more coverage to replace your increased income and cover new debts, such as a vacation home. Job loss? If your budget is tightened, you might need to consider switching to a cheaper term policy to maintain essential coverage. New job? Learn what group life insurance benefits you may now have.
• Family changes: Have a new baby, got married or recently divorced? Your coverage needs can change significantly. Ensure your policy amount is adequate and update beneficiaries to reflect these life events.
• Health changes: Quit smoking or lost weight? You might qualify for lower premiums due to improved health. Diagnosed with a serious illness? Review your policy for riders that provide benefits for chronic or terminal illnesses, and consider converting or renewing your term coverage.
• Policy performance: Have a universal or variable policy? Market interest rates can affect its performance. Regularly check with your agent to ensure it’s meeting your financial goals.

Auto insurance checklist

• Relocation: Moved to a safer area or now have a garage? Your new location could lower your rates. Update your policy to reflect these changes.
• Vehicle upgrades: Added security features or paid off your loan? Enhanced security can reduce your premiums, and paying off a loan can change your coverage needs.
• Driver changes: New teen driver? Ensure they are added to your policy, as they can significantly impact your coverage and rates. Share a vehicle with your spouse? Adjust your policy to reflect changes in usage.
• Work commute: Changed jobs or roles affecting your daily commute? Reduced driving distance can lower your premiums. Ensure your policy reflects your current driving habits.
• Marital status: Recently married or divorced? Marriage can often qualify you for discounts, while divorce might require policy adjustments.

Home insurance checklist

• Property value: Has your home’s value or replacement cost increased? Make sure your dwelling coverage limit, called “Coverage A” in your policy, matches the current values and impacts of inflation to avoid being underinsured.
• Renovations and upgrades: Completed major home improvements like a new roof or basement remodel? Ensure these additions are covered to protect your investment.
• Additional properties: Bought a vacation home or rental property? Ensure these new assets are included in your coverage to protect against potential losses.
• Security enhancements: Installed a home security system? Many insurers offer discounts for added security, potentially lowering your premiums.
• New family members: An aging relative moved in or adopted a new pet? Adjust your coverage to include any new liabilities or responsibilities.

Talk to your agent

Your insurance agent is a valuable resource for ensuring you’re getting the best deal:

• Ask about discounts: Inquire about any discounts you might be eligible for. This could include bundling discounts, loyalty discounts, new telematics programs or discounts for safety features.
• Premium increases: If your premiums have increased, ask why and see if there are ways to bring them back down. For example, you might be able to adjust your deductible or eliminate unnecessary coverage.
• Coverage evaluation: If you’re unsure whether you need more or less coverage, ask your agent for an evaluation of your needs. They can help you determine the right amount of coverage for your current situation.

Compare rates

Finally, it’s always a good idea to shop around:

• Explore other providers: Don’t be afraid to look at what other insurance companies offer. Sometimes, switching providers can lead to better rates and coverage.
• Policy replacement: Make sure not to cancel any existing insurance policy until your new one is fully in place to avoid any gaps in coverage.

By following this checklist, you can help ensure that your insurance policies are up-to-date, appropriately priced and providing the coverage you need. Regular reviews help you stay informed and make smart financial decisions, keeping you, your loved ones and your assets well-protected.

Frequently asked questions

• How often should I review my insurance coverage?

  It’s generally recommended to review your insurance coverage at least once a year. This annual review allows you to ensure that your policies still meet your needs, that you’re not overpaying and identify any coverage gaps. Additionally, you should review your policies whenever you experience a major life change, such as getting married, having a child, buying a home or changing jobs. Regular reviews help you stay on top of any changes in your circumstances that might affect your insurance needs.
  

• Is it a good idea to switch life insurance?

  Switching life insurance could be a good idea if your current policy no longer meets your needs or if you’ve had significant lifestyle changes. For instance, if you originally purchased a policy when you had dependents and they are now financially independent, you might not need as much coverage.

  However, be cautious when canceling a permanent life policy, especially during the first few years. Permanent policies often have surrender charges if canceled early. Additionally, if your health has changed since you first purchased your policy, switching to a new policy could result in higher premiums. It’s crucial to weigh the pros and cons and consult with a financial advisor or insurance expert before making any changes.

• Can I switch homeowners insurance with escrow?

  Yes, you can switch homeowners insurance even if your mortgage is in escrow. Here’s how to do it smoothly:
  
  

  • Shop for and choose a new carrier: Start by conducting a homeowners insurance policy review and researching new homeowners insurance providers. Consider your coverage needs, budget and any specific features you’re looking for, like discounts or a user-friendly mobile app. Once you have gathered quotes and selected a new provider, move on to the next step.
  • Confirm the mortgagee clause for your lender: Before finalizing your new policy, you need to confirm how your mortgage lender should be listed on the policy. This is called the mortgagee clause, which includes your lender’s official name and the correct address for insurance documents. Contact your mortgage company to get this information and provide it to your new insurance carrier.
  • Purchase your new policy: With the correct mortgagee clause, you can finalize the purchase of your new policy. Your new insurance company will bill your mortgage lender directly, so you won’t need to make an out-of-pocket payment.
  • Cancel your prior policy: Contact your current home insurance carrier to cancel your old policy. Make sure the cancellation date matches the start date of your new policy to avoid any gaps in coverage. It’s generally safer to start your new policy before canceling the old one.
  • Notify your mortgage company: Let your mortgage company know before switching home insurance companies. Provide them with the cancellation date of the old policy, the effective date of the new policy, the name of the new insurance company and the new policy number. This ensures they direct payments correctly and helps avoid any confusion.
  • Send any premium refunds to your new escrow account: If you receive a prorated premium refund from your previous insurer, contact your mortgage company to find out how to send this money back to your escrow account. Keeping the refund might result in an escrow shortage, leading to higher monthly mortgage payments.