Why should review my Life Insurance Policy?
Why Should I Review My Life Insurance?
When you think about why buying life insurance is important, you probably think of financially protecting your family and loved ones in your life when you pass away. With life insurance in place, you can help ensure financial support for those that matter most. But have you spent time reviewing your life policy and ensuring it still meets your needs since purchasing it?
Having the right coverage in place means less for you — and those you care for — to worry about. That’s why we recommend an annual life insurance review. Because so much can happen in 12 short months, it's important to make sure your policy is right for you and your family today.
To get you started, we’ve put together a list of 10 key reasons why you should review your life policies every year.
10 Reasons to Review Your Life Insurance Policies Annually
Reviewing your life insurance every year helps make sure your policies are up to date and that additional coverage is added if needed. If you do choose to add additional coverage, in most cases you’ll need to apply for — and then purchase — a new policy. Because term and whole life insurance premiums typically increase as you age, the new rate may be higher for the additional policy.
Use the opportunity to adjust coverage to your needs or make changes to any details on file. This brings us to the number one reason you should annually review your life insurance:
1. To review or change your beneficiaries
Your beneficiaries are the people or entities you’ve selected to receive your life insurance benefit.
Your annual life insurance review should always include a beneficiary checkup. Take this opportunity to add, remove or change your designations due to any big life events (e.g., birth, marriage, divorce) that occurred over the past year or any changes in how you wish the proceeds from the life insurance death benefit to be distributed. Doing so will help make the claims process easier when your loved ones need it most.
2. Your family has grown
As you welcome new members to the family, it's important to update your life insurance. From final expenses to loss of income, your coverage should always meet your growing needs.
You may also want to consider a Whole Life policy for your child. With it, your child will have coverage that can be added to as they grow when you add a Guaranteed Insurability Rider.
It can also build Cash Value which your child can access later in life to Pay for College or a Wedding or a down payment on a new home.
3. You started a new job
In the pursuit of your dreams, landing a job you've been hoping for is a big step. The right opportunity can open many doors and bring you closer to bigger goals.
After a promotion, or when you start a new job, check in with your agent to make sure your policy still meets your needs. It's important to account for extra income and any changes in your employer-based life insurance policy, too.
4.You’re starting a new business
Whether you’ve opened a new online store or launched a brick-and-mortar commercial venture, your big investments probably came with a big loan, or may be the result of a large personal contribution.
If you had earmarked the savings you’ve since invested for inheritance, an additional life policy may be necessary to make up the difference and ensure your loved ones are provided for if you were to pass away. And if you took out a loan that your loved ones could be responsible for, you’ll want to know that you have enough life insurance to cover this new obligation.
5. You’ve added debt
Did you take on any new loans over the past year? Things like home equity loans, or credit consolidation loans to lower interest payments. Those small shifts in your finances could possibly make a big difference when your loved ones are on a fixed income.
It’s always a good idea to bring an updated monthly budget to your annual life insurance review. Having a full scope of your finances can help provide needed relief to your beneficiaries.
6. Conditions have changed for your parents
Things may have changed for your parents, result in assisted living, or them moving in to your home. This could mean taking on a greater monthly financial load.
If this is true for your family, it's important to consider adding coverage for increased costs. You may also want to consider final expense coverage for your elderly parents at the time of your review.
7. New marital status
Few changes in your life will be bigger than a shift in your marital status. For the recently engaged or married, you’ll most likely want to be sure your partner is named as a beneficiary on your life policy.
This also applies to divorced or separated couples. Take the time to make sure your beneficiaries are up to date and reflect your wishes. When this step is overlooked, previously named beneficiaries could be legally entitled to funds you may want others to now receive.
8. Your kids are out on their own
As kids grow up, they move on. Often, though, that still includes your financial support; especially for students starting college. Keep their future secure by verifying your policy details. If your children are more financially independent, you may consider allocating benefits elsewhere.
9. Medical diagnosis
Health issues can emerge at any time and prompt a lot of sudden change. As complicated medical conditions progress, they tend to become more expensive. When reviewing life insurance policies, it’s a good idea to consider those future expenses and make sure you have funds available for treatment if a family member’s health has changed.
10. You recently bought a home
If you’ve recently closed on the purchase of a new home, that’s a change worth reviewing with your insurance agent. With a new mortgage in play, you will likely want your family to continue living there after your passing. Make sure your policy has the coverage amount and duration needed for your survivors.
