I have been selling life insurance for 10 years and over that time I have worked with hundreds of families. Everyone’s situation is unique, but the common thread is that life is all about change. Change is the one constant that keeps our lives interesting. Friends come and go, families grow and sometimes shrink. We move to different cities or even return back home. We get married and divorced. Our kids grow up and start families of their own.
With this constant change in our lives, it is important to review your life insurance once a year to make sure your policy still fits your needs. Here are a few areas of consideration.
Do I Still Have The Right Amount Of Insurance?
When you initially purchased your life insurance policy, you probably went through exercise with your agent to determine what the right amount of insurance for you and your family at that time. Some factors may have been the age of your children, planning for a possible college fund and also the amount owed on your mortgage or other debt.
So when was the last time your reviewed this amount? Was it 5 years, 10 years ago or even longer? Have your kids now grown up leaving you with less of a need for life insurance? Have you paid off that mortgage and no longer need so much death benefit? It may be that times are now tougher and you have had to take out a 2nd mortgage and need more insurance? Without doing a review with an experienced agent, your policy may not match your current needs
Do My Beneficiaries Need Updating?
This is a huge area of life insurance planning that often gets neglected. First of all, you should never leave life insurance proceeds to a minor child. The primary beneficiary should be your spouse or a responsible adult that will take care of your children and the money on their behalf should something happen to you. You should also meet with a local estate planning attorney to draw up a will and living trust agreement to ensure that things get handled properly and your financial affairs are in order.
Another area where I see beneficiary errors is after a divorce. It may be that you still want your ex as your beneficiary, but I can tell you that not everyone does. Maybe you are remarried and want to update your policy to your new spouse? There are countless scenarios, but you get the point. Just keep in mind, only the owner of a policy can make these changes.
Do I Still Have The Right Type Of Policy?
When you first bought your policy, it may have been that all you could afford was term insurance. Nothing is wrong with that, but most term policies have a provision that within a stated amount of time, you can convert your policy to a permanent type like Universal Life. The great thing is that you can do this usually with no exam if you are within the given time frame stated in the policy.
On the other hand, maybe you bought Universal Life from the beginning, but now you are having a hard time affording it. I have seen a lot of cases where people are stretched too thin and having to borrow against their policy too soon. There is danger in doing this because it will shorten the life of your policy and ultimately you may be just paying for really expensive term insurance. If this sounds like you, you probably do need term insurance without the costs of Universal Life.
September Is Life Insurance Awareness Month - LIAM
September is the perfect time to review your life insurance policy given the national campaign of LIAM. If you would like to set a time to review your policy with me please contact me at 360-452-9200
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