Update Your Life Insurance Policy | As Your Life Changes

The unpredictable journey called life

Life,

It sure is unpredictable. You have those moments of happiness (which seems fleeting), of joy (which we try to hold on to)... but we also have the moments of challenges, despair and it just feels like everything is going wrong. As author Robert Burns once wrote, “ the best-laid plans of mice and men often go awry.” And whether it’s getting married, welcoming a new-born baby into this world or starting your own business—in between all of it are financial responsibilities evolve. Yet, the data suggest many Australians overlook one critical aspect of their financial planning: updating their life insurance policies.

According to APRA (Australian Prudential Regulation Authority), over 70% of Australians hold life insurance policies through their superannuation funds. However, a significant number fail to review their coverage regularly, leaving gaps that could have serious financial implications. This guide will walk you through the importance of updating your life insurance policy, the life events that demand attention, and practical steps to keep your coverage relevant.

Why keeping your life insurance policy updated is important

As with many things in life, what is perfect years ago might not be today or in the near future. And the same is true with your life insurance. Yes, it’s a cornerstone of financial security for your loved ones. Yes, it will give you peace of mind and help with covering funeral expenses when that time comes. But, when that time comes the policy might not be accurate as it was when you first sign up. Which, is why is it so important to ensure it meets your needs today.

Avoiding gaps in coverage

Imagine this scenario…

You are in your early thirties (lovin’ life) and you pull the trigger on getting life insurance. Like sand through an hour glass, the years pass on. Next thing you know you are 36(ish) and no longer are you single… you’re married, you have even purchased your first home. You even have 2 small kids. Wow, a lot sure has changed. But one thing hasn’t… you policy! Now let’s say something happens to you (let’s call it the unexpected). In this scenario coverage would be outdated. Meaning, your partner and kids don’t get any of the coverage you've been paying and are left with financial burdens.

Ensuring beneficiaries are accurate

Life is complex, sometimes messy. Things happen -and- can often shift the shape and dynamics of your life… and your relationships. In the event your insurance policy still lists an ex-partner as a beneficiary or excludes a new child, your intentions may not be honored. Make sure that when significant events occur in your life, your policy is reflective of this. After all, you want to ensure your legacy reaches the right people.

Aligning with financial goals

As your life changes, most likely your goals will too. And you want your life insurance to support these evolving goals. Maybe it’s helping funding your child’s university education, or, protecting your partner from mortgage debt. Whatever it might be, your policy should be current and align with your objectives and ensure that those objectives can be met.

Life events that may require policy updates

Marriage

Marriage unites a couple and it is said that it makes two become one. With that unity also comes shared financial responsibilities. Examples include joint mortgages or perhaps shared savings goals or shared debts. Updating your policy ensures the one you got married to is adequately protected.

Divorce

This is the flip side to the above and a divorce may require you removing an ex-partner as a beneficiary to ensure you and not providing them with payouts they might no longer be entitled to.

Having Children

This would have to be one of the most life changing events one could have. It’s a life changing event (in many ways) and brings with it new financial commitments. Between the costs of daycare, education, clothes, outings, food and unexpected costs it can sometimes seem like infinite costs. This is why many people choose to get life insurance. And if a new child comes along or circumstance chance, this needs to be reflected in your policy. With the right coverage and from a financial perspective, in your absence your children will be looked after.

Example: Depending on the research you read, the cost of raising a child in Australia is estimated to be from $170,000 all the way up to $300,000 a year. Obviously not all children will go to expensive private schools, but regardless of where they go, and the circumstances of your family, adjusting your policy ensures these ongoing annual costs are covered.

Buying a Home

They say it’s the biggest financial commitment you will ever make. And there’s no doubt about it, taking on a mortgage will significantly increase your debt level and the level of finance obligations you have. If you get your policy after you have purchased your home, most policies will have this squared away. But in the event you were renting when you got your policy -or- you a re buying another home (for whatever reason) your policy might need to be amended.

Acquiring debt

Somewhat similar to buying a home, debt is a liability that could be passed onto your loved ones. Make sure your policy is updated when you acquire new debt such as a boat, jetski, etc etc

Significant changes in income or employment

While receiving a promotion and salary increase can boost your income, in many cases in equates to an increase in lifestyle and expenses. Therefore, updating your policy ensures your coverage reflects any new commitments you’ve taken on. On the other side of this, is if you become redundant or lose your job (for whatever reason). Also, there are jobs where life insurance comes as part of the benefits of the role. So, if you those that role, you’d need to review your options and perhaps seek to take out a new policy.

Starting a Business

Many If you’ve started a business -regardless of the size- you are now taking on more financial risks. Having the life insurance policy can safeguard your partners or even ensure the business continues by covering key persons and their insurance needs. However this is something that might need to be updated in your policy. As a side note; And there are certain insurers who specialise in this over others.

Retirement

Did somebody say retirement? Wow, life really does go fast doesn’t it!

When you enter into this later season of life, there is no doubt that your priorities within life also shift. Maybe your children are financially independent, maybe all your debts are paid off. Or maybe not. As the circumstance change though, aligning and updating your policy should be something to have on your to do list. Once done, you can focus on legacy planning, reducing unnecessary premiums… and enjoying the retiree life.

How to review and adjust your life insurance policy

Just because the seasons of life and your circumstances change, it doesn’t mean updating and/or changing your policy has to be hard. In fact, it’s usually relatively straight forward. Unfortunately we put a lot of self-imposed pressures and confusion on our selves due to the jargon and what we think will be complex to update. With a few simple steps adjusting your life insurance policy doesn’t have to be as hard as one might think. Keep these points in mind;

Reviewing your coverage amounts: As mentioned above, it’s important to assess and understand your financial commitments. This includes debts, assets, dependents, your future goals, health considerations, life stages and events And, if your existing policy doesn’t cover these adequately, it’s time for an update. Use Life Insurance Compare online life insurance calculators to determine the right sum insured.
Add or change beneficiaries: Who you designate and assign as the beneficiary is critical. It’s a good idea to ensure those you have assigned are accurate and reflect your current relationships, especially after significant life changes. Those key changes that might impact who the beneficiary might be include;

Marriage
Divorce
Birth of a child

Adjust riders or add-ons

If you are not sure what riders are, consider is as an extra add on to your policy that provides additional coverage. Another way to say it is that riders can enhance your policy. As an example, you might consider adding a child rider to cover dependent-related costs or a disability rider to provide income replacement if you’re unable to work. If you want to learn more about riders, you can read our blog; What are riders

Evaluate term vs. permanent insurance

If your term policy is nearing its end, it's a good idea to eexplore renewal options. Or, a conversion to permanent insurance, or a new term policy. This will all depend on what you want to achieve and other factors such as age health, and financial goals.

Common Mistakes to Avoid When Updating Your Policy

In the words of Frank Sinatra… “Regrets, I've had a few. But then again, too few to mention.” And we get it, mistakes happen. Just make sure these ones don’t…

Forgetting to Notify Beneficiaries

Even if you have an updated policy, if you don’t tell/inform you beneficiaries, it can potentially can lead to delays in payouts. This doesn’t always happen and insurance companies have their legal obligations, however it’s better to be safe than sorry. So just ensure they’re aware and have access to relevant documents. If they are locked in a safe somewhere, make sure you are not the only one that knows where the key is.

Overlooking exclusions or new terms

Policy updates may come with changes in terms or exclusions. For example, new health conditions or risky hobbies could impact your coverage. Review the fine print thoroughly. Also, we are working on a tool that will allow you to review your policy in real time to see if you need to know anything. To join the waiting list for this new feature from Life Insurance Compare, click here.

Not reviewing policies regularly

Life changes don’t always happen at predictable intervals. Schedule annual reviews to ensure your policy remains relevant, even in the absence of major events. This can be done with your financial planner, direct with your insurer or with our free policy review tool that checks the policy for you (as per above).

Tools and resources for managing policy updates

There are plenty of tools available and we encourage you to use some of our calculators and review some of our in-depth expert guides. In addition, you can also utilise the following:

Online platforms for policy management by the insurers

Many (if not all) insurers offer some form of a digital portals -or app) for policyholders. These portals or apps allow you to check your coverage, update beneficiaries, and manage premiums conveniently.

Working with financial advisors or brokers

A licensed financial advisor can provide tailored advice, ensuring your policy aligns with both personal and professional goals. We work with a number of trusted financial planers and insurance brokers and you can even use out find a broker tool to see their reviews.

Comparison tools

Platforms like Life Insurance Compare make it easy to evaluate policies from different providers, ensuring you get the best coverage at competitive rates.

New free auto-policy checker

Life Insurance Compare will be launching an all new and free to use tool that allows you to check your policy without going to an advisor and paying fees, wihtout going to your insurers confusing portal or app... you simply let in run in the background and if there is a change you need to know about you'll get an email.

Frequently asked questions on updating your life insurance policy

Q: How often should I review my life insurance policy?
You should review your policy annually or after any major life event, such as marriage, having children, or buying a home.

Q: Can I update my policy online?
Many insurers offer online portals where you can update beneficiary details or make minor adjustments. For significant changes, you may need to contact your provider directly. Or use our free tool.

Q: What happens if I forget to update my beneficiaries?
If your beneficiaries are outdated, the payout may go to someone unintended, such as an ex-partner. Always review your designations regularly.

Q: Does updating my policy affect my premiums?
Adjusting your coverage or adding riders may increase premiums, but it ensures your policy meets your current needs.

Q: Can I switch insurers while updating my policy?
Yes, but ensure you compare policies thoroughly and don’t let your existing coverage lapse before the new policy is active.

Final thoughts on updating your life insurance policy...

Life insurance is financial product -but- it’s a promise to your loved ones. And, the insures have legal obligations to keep that promise and make the payouts. However, if regular updates are not made, or, if there is something missing from the insurance policy based on a life event that happened, sometimes payouts are not made. Hence the importance of ensuring your policy is updated. By staying proactive, you can protect your family’s future while achieving peace of mind.

Ready to update your life insurance policy?

Life doesn’t stand still, and neither should your life insurance policy. Compare and see how much you could be saving with Life Insurance Compare today -or - sign up to use our free policy checking tool... all at no cost!

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How to Update Your Life Insurance Policy as Your Life Changes