If you’ve owned the same life insurance policies for a while, chances are that your coverage needs have drastically changed. Whether you’ve gotten married, had kids or your children have left the nest, it’s important that your life insurance coverage reflect your situation as it is now. So, it’s prudent to review your life insurance regularly. When and why should you review your life insurance policies?
If in a new relationship: Maybe you were single when you took out your current policy, and now you are living with a partner or even married. Or conversely, you may have been married and are now divorced or with a different partner. It’s important to not only evaluate the level of coverage you have, but also to update who you want to include as your beneficiaries.
Birth of child: The addition of children to a family can make a huge difference to the family finances. The additional mouths to feed should be reflected in the amount of coverage you have.
Additional financial commitments: You may have taken on more financial commitments, such as a mortgage or a car loan. With this increased debt to deal with, your family could be left without enough cash to cover necessary costs and commitments in the event of your death. Make changes to your life insurance accordingly so that your coverage takes into consideration these increased financial commitments.
An increase in income levels: An increase in income means that you likely have become used to living on a higher income, become used to a different lifestyle, plus you may have taken on increased financial commitments in line with your higher income levels. This may require an increase to your current coverage.
Less debt: As your debts are paid down and you have reduced financial commitments to meet you may want to decrease or change your insurance coverage.
Changes to beneficiaries: If the main beneficiary of your life insurance policy were to inadvertently pass away and you have not named any secondary beneficiaries, you should name someone else. Furthermore, it’s usually a good idea to set up secondary beneficiaries to your insurance policies when possible so that the death benefit goes to the people you want it to.
Adding to all the above, the coverage you have may have become very expensive, such as term insurance that has gone through a few renewals. And your needs may now require solutions that permanent insurance coverage can solve that temporary coverage cannot. For example, you may want to conserve your estate for your heirs from debt or tax shrinkage or to equalize your estate to compensate children who are not involved in the family business or farm.
Start by reviewing your existing policies to determine if they are still of good value. Then you may want to explore options that may be more suitable to your current situation. If you aren’t sure how to go about reviewing your coverage, you can ask for help from a trusted life licensed insurance adviser. If you’ve lost contact with the person who sold you the policy, a new advisor can take over as agent of record.
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