9 Loopholes Your “Perfect Insurance Plan” Might Have

Think you’ve got the best life insurance policy around? Think again!

The basic reason why people get insurance is because it’s a great way to financially secure your future and prevent any untoward incident from completely depleting your savings. It can help to provide long-term care during old age, or a supplemental source of income after retirement. Moreover, if you are quite the spendthrift, then an insurance plan helps you save money too.

Having insurance is mandatory for any good financial planning. However, there are a number of aspects that have to be kept in mind. Perhaps one of the most imperative of these is to review your coverage every year, incorporate any changes and upgrade your insurance policy in order to live a more worry-free and financially comfortable life.

Here are 9 loopholes you might find in your insurance plan during an annual check-up:

1. Change In Income – Whether it is an upgrade or a downgrade in your income, either way a change has to be made in the insurance policy. In addition, sometimes a new employer may not offer disability or long-term care insurance, and in such a case, you will have to personally invest in an insurance policy to keep your income safe.
2. Acquisition of New Valuables – Although regular insurance only covers a limited number of high value items, these can be covered by a floater in the policy if they are appraised. If you have bought jewelry, electronics, fine art or other expensive items in the past year, your existing policy might not cover them, so you may need additional coverage.
3. Planning or Having a Baby – While these bundles of joy are a welcome gift for any parent, they do raise the cost of your life insurance. This means your earnings and savings will also have to be increased in order to take care of an additional dependent if anything should happen to you.
4. Marriage/Divorce – Getting married does increase quite a few responsibilities, but it has a positive impact on your long-term care insurance. You may not have to pay for two insurance plans and can get joint coverage. However, you will need additional coverage for your spouse’s valuables. In case of divorce, you will need to get an individual insurance policy.
5. Driver’s License for a Teenaged Child – If you have a teenager at home who has just started driving, it is a good idea to add them to your personal auto insurance policy instead of going for the more expensive individual auto insurance. You need to remember that it’s essential to have some coverage for young/learning drivers too.
6. Carpool – Did you just begin to carpool with other drivers? Well, good news for you! Your premium would be lower now that you are not driving as much. On the other hand, if you are the one offering carpool services and driving the vehicle most of the time, then you will have to increase your liability insurance.
7. House Renovations – If you have recently renovated your house, you may be underinsured because of the changes, especially if you have invested in new electronics, furniture, etc. Everything that was added during the renovation will need to be ensured, which may change your insurance premium and coverage.
8. Retirement/Vacation Home Investment – Before making a big investment, make sure you have done all the ground work related to insurance costs that will be incurred. These costs will also depend on the location of the property, e.g. in an area prone to hurricanes or floods, the insurance cost will rise. However, if you already have such a property, do not forego insurance, as it is in your best interest.
9. House/Apartment Lease – Leasing a place might sound like a wonderful idea, especially since you won’t have to pay homeowner’s insurance. However, you will need to get an insurance plan to cover valuable items that you have in your new place. So, if you have recently leased a house or an apartment, you might want to ensure that all your possessions are covered in your existing plan, or upgrade it as needed.