The Importance of Insurance Portfolio Review

Many of us likely hold multiple insurance policies, some of which were purchased decades ago. Do you remember what they are and why you initially bought those policies all those years ago?

Why perodic insurance portfolio review is important?

You probably just remember that your premiums are deducted via GIRO and paid on time. But what exactly are the policies for, and when is their maturity date? It’s crucial to know what you’re paying for.

Conducting a yearly insurance portfolio review helps you stay informed about your insurance policies, including:

• Identifying protection coverage gaps
• Updating your investment portfolio, especially for Investment Linked Policies (ILP)
• Finding cost-saving opportunities
  
  

Protection Coverage Gaps

As we age, life stages change. The whole life policy or term life insurance you purchased years ago may not be sufficient as you grow older.

For example, a whole life insurance plan purchased 20 years ago will not cover Early Critical Illness, as this rider was introduced about 15 years ago. If a critical illness strikes at an early or intermediate stage, the policy you have will not pay out the sum assured.

Another example is the life stage change to parenthood. The policy you purchased before becoming a parent may have been sufficient when you had no dependents, but once you have a newborn child, your protection coverage needs change immediately. You will need to add on death or critical illness coverage sufficient to cover your child’s education funds in case of premature death or sickness. In this case, a term life insurance is usually added to boost the coverage needed for 20 years (from birth till your child finishes their education)

Read more: How much insurance coverage do you need in Singapore

Read more: How Pre-exisiting medical conditions can affect your insurance application

Investment Portfolio Updates

Simply holding an Investment Linked Policy (ILP) and waiting for long-term growth or relying on dollar cost averaging does not guarantee success, although these strategies can aid wealth accumulation. Investment Linked Policy requires periodic portfolio reviews and fund switches based on market conditions to maximize returns.

Older ILP plans often come with significant policy and mortality (insurance) charges. If your investments yield an average of 3% annually while your policy and mortality charges are 4% or higher, your ILP will not perform well in the long run.

Therefore, it’s essential to review your investment portfolio with your financial advisor at least once a year to stay updated with market trends and ensure your policy remains effective.

Read more: What is an Investment Linked Policy (ILP)

Related Article: 6 Best Investment Linked Policies (Updated)

Cost Saving Opportunities

Given the high competition in the market, insurers are offering significant discounts on their plans, particularly term life insurance. It’s worthwhile to review your insurance portfolio to see if there are more affordable plans available that can replace your current ones, possibly even with better features. However, this is only advisable if you do not have any pre-existing medical conditions, as switching from an old policy to a new one may not be feasible in such cases.

Singlife and HSBC Life have whopping perpectual discounts on their term life insurance. Check out our reviews on the 5 Best Term Life Insurance in Singapore.

Related article: Term Life Insurance: How does it works?

Get your Insurance Portfolio Review ASAP

Contact your financial adviser today to arrange a portfolio review. If you don’t have a regular financial adviser, we’re here to help!

We work with up to 12 insurers and can assist you with your insurance portfolio review. Simply provide us with your policy details. WhatsApp us today or leave your contact details in the form below, and our experienced advisers will reach out to you for a free insurance portfolio review. No strings attached, we only want to help!