A few years ago, you did the responsible and proactive thing by buying a life insurance policy. You should feel great about that accomplishment. Buying life insurance is meant to reassure you that expenses will be covered for your family and give you peace of mind. And like most people, you put your policy in a safe place and haven't thought about it in years. But ask yourself: has any part of your life changed since you bought your policy? I'm talking about life changes such as getting married, buying a new home, having a new baby, empty nest, and divorce. If so, then your policy might not reflect your current situation. You could be underinsured or giving your benefits to a person you no longer speak to today!
Here are FIVE reasons to review your life insurance coverage:
1. Do you have enough coverage for your current needs?
If you have a life change since the time you bought your policy, chances are,you could be underinsured. A new home, getting married, a new baby are exciting life events that affect your insurance needs. For example, if you have a 500,000 home, a new wife, and a new baby on the way, and your old policy was only 100,000, this will not be enough to support your new family should something happen to you.
2. How long is the length of coverage?
Some clients start with a term policy due to their limited budget. Because of this, two things need to be considered, when is the term going to end? And what options are available for you? If your term is coming to an end, you will be able to prepare a plan to continue coverage by either converting it to a permanent plan or looking at a new plan altogether. The best option will depend on many factors, and a good agent should be able to guide you.
3. Have you updated your beneficiary(s)?
Reviewing your beneficiary now, allows you to add adult children as a beneficiary to your policy if they were still a minor when you originally bought your policy. Although every so often, I do run into those with minors listed as beneficiaries, which I do not recommend. Unfortunately, their agent failed to advise them wisely on better alternatives. Most children are not fit to handle money, let alone a large sum. Then state probate will have to decide who gets to manage the funds for the minor, and there could be disputes among family members. Potentially, this takes the control away from the person you would want to handle the funds and is totally avoidable. You can also remove those who no longer need to be your beneficiary, such as your deceased or ex-spouse. You can change or update your beneficiary at any time. Doing a review gives you a chance to get it done.A contingent beneficiary is also something you may want to add or change. A contingent beneficiary will receive the benefits in case the primary beneficiary is no longer around at the passing of the insured person.
4. Is the cash value of your policy growing?
If you have a cash value or permanent policy, reviewing the growth of the cash value is another smart thing to do. It gives you a chance to ask questions to your agent, plan for any significant future expenses, or to change interest crediting allocations on an IUL based on current market conditions. (An IUL is an index universal life plan which uses different indexes as basis for interest credited to your cash value.)
5. Is your policy in danger of lapsing?
Regularly reviewing your policy can keep you on track and also prevent the policy from lapsing, which is insurance lingo for terminating due to exhaustion of cash values. I recently reviewed a client's policy only to find out that the policy will lapse in a few years. By reviewing her policy and identifying the situation, I was able to help her find a solution. If we had not reviewed her policy, my client would have been surprised not to have insurance in a few years.
If you haven't considered your current life insurance lately, or know someone who may have put it off, I am offering complimentary policy reviews. Make an appointment now, and have peace of mind for many years to come. Click here to schedule it today.