Insurance is designed to protect you as life evolves. However, many people forget to update their policies as their circumstances change. Salaries increase, families grow, loans start and end, and healthcare costs continue to rise.
When life moves forward but insurance stays frozen, protection gaps quietly emerge. A timely insurance review helps ensure your cover remains adequate, your premiums stay efficient, and your claims process works smoothly when your family needs it the most.
Before diving into the checklist, keep one thing in mind: tax rules and product regulations change frequently. Deductions under Chapter VI-A (such as 80C, 80D, and 80CCC) generally do not apply under the new tax regime, while death benefits remain largely exempt, subject to prevailing laws. Always evaluate insurance using the rules applicable to the current financial year.
Why Insurance Reviews Matter
Insurance policies do not automatically adjust with your life. Over time, this creates gaps that may go unnoticed until it is too late.
Adequacy Drift Over Time
Inflation and lifestyle upgrades gradually reduce the real value of an older cover. This phenomenon, known as adequacy drift, can leave families underinsured even though policies remain active.
Life Events That Change Risk
Marriage, children, dependent parents, or new loans significantly alter your financial responsibilities. Each milestone increases the amount and type of protection required.
Regulatory and Tax Changes
Updates to TDS rules, health-insurance sub-limits, or maturity taxation for high-premium life policies can materially affect outcomes. Periodic reviews help you stay compliant and tax-efficient.
Claim Readiness and Documentation
Updated nominees, correct KYC and PAN details, and organised policy records reduce friction during claims, easing stress for your family during difficult times.
How Often Should You Review Your Insurance?
A structured review rhythm keeps your insurance aligned with your life.
- Annual review: Align with your yearly financial planning exercise.
- Life-event review: Marriage, childbirth, job change, relocation, or major income shifts should trigger an immediate reassessment.
- Policy anniversary review: Adjust riders, deductibles, or sums insured before auto-renewal.
- Pre-tax season review (Jan–Mar): Helps optimise regime selection and deductions if using the old tax regime.
- Post-claim review: Reassess adequacy, exclusions, and restoration benefits after any claim or hospitalisation.
Triggers That Demand an Immediate Review
Some situations require action immediately, not at year-end.
Income and Career Changes
Salary hikes, promotions, business income volatility, or freelancing income can alter protection needs.
Liability and Loan Changes
Home loans, education loans, or business borrowings increase dependency risk and must be reflected in life cover.
Family Structure Changes
Marriage, childbirth, or parents becoming financially dependent change nominee structures and coverage adequacy.
Health and Medical Risk Changes
Chronic conditions, lifestyle diseases, or rising city-specific medical costs warrant health cover upgrades.
Employer and Policy Changes
Reduced group insurance benefits, new co-pays, or room-rent limits can weaken employer-provided cover.
Regulatory or Tax Updates
Changes affecting ULIPs, traditional policies, or TDS on non-exempt payouts require prompt evaluation.
What to Review: Product by Product
A detailed review works best when each insurance product is evaluated separately.
A) Term Life Insurance
Start by checking whether your sum assured meets the 15–20× annual income guideline. For precision, apply the Human Life Value (HLV) method, which accounts for income, expenses, liabilities, and goals.
Ensure the policy term extends at least until financial independence or the end of your longest liability. Review riders such as Accidental Death Benefit (ADB), Waiver of Premium (WOP), and Critical Illness (CI) to confirm they add real value.
Also verify nominees, contingent nominees, and custodians for minors. Keep proposal forms, medical records, and receipts updated and accessible.
B) Health Insurance (Individual or Family Floater)
Evaluate whether your base cover is adequate. In metro cities, ₹10–25 lakh via base + super top-up is more realistic than minimal covers.
Pay close attention to:
- Room-rent limits and sub-limits
- Co-pays, especially for senior citizens
- Waiting periods and permanent exclusions
- No-claim bonus (NCB) and restoration benefits
- Hospital network availability in your city
C) Personal Accident Insurance
Check whether the capital sum insured equals 5–10× annual income. Ensure coverage includes accidental death and permanent disability. Temporary Total Disability (TTD) benefits are critical for protecting short-term income loss.
D) Critical Illness and Income Protection
Critical illness cover should ideally replace 2–3 years of expenses, allowing recovery without financial stress. Disability income policies should replace 40–60% of income if long-term disability occurs.
E) Mortgage and Loan Protection
Confirm that cover aligns with your outstanding loan amount and tenure. Level-term covers are generally preferable to decreasing covers due to better transparency and portability.
F) Savings and Investment-Linked Life Policies (Traditional / ULIPs)
Review the internal rate of return (IRR) and assess whether it aligns with your financial goals. Track high-premium tax rules to understand whether maturity proceeds remain exempt.
Before surrendering or making a policy paid-up, evaluate:
- Surrender charges
- Bonus impact
- Long-term tax consequences
Also track potential TDS implications under Section 194DA for non-exempt maturities.
G) Motor, Travel, and Property Insurance
- Motor: Update IDV annually and add relevant add-ons.
- Travel: Check coverage limits and pre-existing condition clauses.
- Home: Verify reinstatement values and optional covers like burglary or earthquake protection.
A 20-Minute DIY Insurance Audit
You can complete a practical insurance audit in just 20 minutes.
Minutes 0–5: Gather
Collect policy schedules, premium receipts, insurer contacts, TPA cards, KYC, PAN, and nominee details.
Minutes 5–10: Identify Gaps
Compare life cover with the 15–20× rule. Assess health cover against real hospital costs in your city. Check whether CI, PA, and disability covers are adequate.
Minutes 10–15: Optimise Costs
Remove duplicate riders, adjust deductibles, and consolidate scattered policies into a strong base plus top-up structure.
Minutes 15–20: Update and Organise
Update nominees, set renewal reminders, and store documents in a secure digital folder accessible to your family.
Common Insurance Review Mistakes to Avoid
Many protection gaps arise due to avoidable errors:
- Treating insurance primarily as an investment
- Keeping health base cover too low in metros
- Ignoring room-rent caps and co-pays
- Buying unnecessary duplicate riders
- Incomplete disclosures
- Surrendering legacy policies without evaluating charges or tax impact
Old vs New Tax Regime: Review Implications
Under the old tax regime, deductions under 80C, 80D, and 80CCC may apply, subject to premium-to-sum-assured limits.
Under the new tax regime, these deductions generally do not apply. Choose the regime based on slab benefits, employer contributions, and NPS advantages rather than insurance purchases alone.
High-premium policyholders should track maturity taxation carefully and remain alert to possible TDS under Section 194DA.
FAQs
How often should I review my insurance portfolio?
At least once a year and after every major life event.
How much term insurance do I need?
Begin with 15–20× annual income, then refine using Human Life Value.
Is ₹5–10 lakh health cover enough?
In metros, ₹10–25 lakh via base plus top-up is more realistic.
Do riders always make sense?
No. Choose riders only for major, unavoidable risks.
What should I track for high-premium life policies?
Aggregate premiums, policy issue dates, tax rules, PAN linkage, and realistic return expectations.
Conclusion
Reviewing your insurance portfolio is not a one-time activity. It is a continuous alignment of protection with your present reality. As your income, family structure, health, and liabilities evolve, your insurance must evolve too.
A structured review helps strengthen coverage, control costs, avoid tax surprises, and ensure your family faces minimal friction during claims. With periodic checks and informed decisions, your insurance portfolio becomes a reliable, efficient shield for your financial life.
