Life insurance is one of the most critical components of a solid financial plan. It provides security for your loved ones, ensuring they are financially protected in the event of your passing. However, simply purchasing a policy is not enough; reviewing it periodically is just as important. Over time, your financial situation, family needs, and insurance products evolve. Without regular reviews, you might miss opportunities to optimize your coverage or risk your policy lapsing when your family needs it most.
Why Review Your Life Insurance Policy?
Many people purchase a life insurance policy and forget about it for years. While the initial coverage may have suited your needs at the time, circumstances change. Here are a few key reasons to review your policy:
- Your Policy May Have Built Cash Value: If you have a whole life or universal life policy, it may have accumulated cash value that can be used to enhance your coverage, lower premiums, or provide additional financial flexibility.
- New and Improved Policies Are Available: Life insurance products continually evolve, and newer policies may offer better benefits, lower premiums, or more flexible options.
- Changes in Your Personal Life: Marriage, children, home purchases, or career advancements can all impact your insurance needs. Regular reviews ensure that your coverage aligns with your current situation.
- Policy Lapses and Premium Increases: Some policies require ongoing premium payments, and if payments are missed, coverage could lapse. Ensuring your policy remains active is essential for your family’s protection.
What to Review in Your Life Insurance Policy
When reviewing your life insurance policy, consider the following key elements:
- Coverage Amount: Does your current coverage still align with your financial obligations and family’s needs?
- Beneficiaries: Ensure your beneficiaries are up to date, especially if you’ve had significant life changes like marriage, divorce, or the birth of a child.
- Policy Type and Features: Understand whether you have term, whole, or universal life insurance and how its features align with your current financial goals.
- Premium Costs: Have your premiums changed? Is there an opportunity to get better coverage at a lower rate?
- Cash Value and Loan Options: If applicable, check how much cash value your policy has accumulated and explore ways to utilize it effectively.
- Expiration or Renewal Terms: If you have a term policy, find out when it expires and explore conversion options if needed.
Questions to Ask Your Insurance Carrier
Go ahead and find your latest life insurance policy statement. If you can’t find one find the number for your insurance carrier can call them right away. When contacting your insurance provider, ask the following questions to ensure your policy is in good standing and ask for the copy of the policy if you don’t have one.:
- Is my policy active and in good standing?
- What is my current death benefit amount?
- Has my cash value grown, and how can I utilize it?
- Are there any riders attached to the policy, like Long term care?
- Are my premiums up to date, or have they changed?
- Do I have any outstanding loans against my policy?
- What are my options for upgrading or converting my policy?
- Are there any new policies available that offer better benefits or lower rates?
Where to Keep Your Policy Information
It is crucial that your beneficiaries or estate executor can easily locate your life insurance policy in the event of your passing. Consider keeping copies in the following secure places:
- A Safe or Fireproof Lockbox: Store a physical copy in a secure, fireproof location at home, and inform your executor or a trusted family member of its location.
- With Your Attorney or Estate Planner: Provide a copy to your estate attorney or financial planner, ensuring they have access to important documents when needed.
- A Secure Digital Vault: Use a digital document storage service or an encrypted USB drive to keep electronic copies accessible to authorized individuals.
- With Your Beneficiaries: Inform your beneficiaries of your policy and provide them with necessary details on how to access it.
- In a Bank Safe Deposit Box: This can be a secure option, but ensure that a trusted individual has access in case of an emergency. Banks will need this person to have a Power of Attorney for Property
Take Action Today
Don’t wait until it’s too late to review your life insurance policy.
Ensure your family’s financial future is secure by taking a proactive approach.
Download our free Life Insurance Policy Review Brochure today to get started on a step-by-step guide to evaluating your coverage and making informed decisions about your financial protection.
