When is the Last Time You Looked at Your Life Insurance Policy?
Whether it’s getting a tune up for your car, seeing the dentist periodically, or one of the many other inconvenient but necessary activities of life, you do it because you know the consequences of not doing so will, almost surely, be worse
Doing an annual review of your life insurance policy is, in many ways, no different. It can be inconvenient and easy to overlook, but it is an important task to good financial health. Moreover, it’s not nearly as painful as a root canal.
Term or Perm?
This post is primarily concerned with using term life insurance to cover the financial obligations that correlate with what’s important to you. This means things like a safe home and a good education for your loved ones.
However, it is important to note that some permanent policies accumulate cash value and some require adjustments during the policy period in order to maintain coverage and achieve performance goals. It is of particular concern that these policies be monitored regularly.
Does your policy fit your life today?
Most people who buy life insurance do so in conjunction with significant life events. These events, the birth or a child and the purchase of a new home are the most common examples, tend to shape your future financial obligations. As such, when there are material changes to your obligations, it is worth reviewing your life insurance coverage.
Just as new children and new mortgages may require increased coverage, college graduations and paid down mortgages may decrease the need for coverage. Evaluating your current need, and estimating the time frame for your obligations is the essence of a term life insurance review.
Things to consider…
Once you have as accurate a picture as possible of your current obligations, and anticipated time frame of those obligations, you can decide if an increase or a decreased life insurance benefit or term length makes sense.
If, for example, you are 10 years into a 20 year term policy-but will require insurance for 20 more years, the time to act is now. If you were to wait until the current policy were to expire, you would be facing far more expensive terms than you could get today. Moreover, it is unlikely any of us will be in better physical condition in ten years than we are today.
Speaking of physical condition, if your’s has deteriorated to the point where new insurance is either unavailable or unaffordable, it is worth exploring if the policy you currently have has the option to convert to a permanent policy. Conversion “window” terms differ from carrier to carrier and policy to policy so make sure that you know the specifics.
Lastly, regardless of the trajectory of your obligations, you may want to explore the marketplace. The reason being, that medical advances and updated mortality tables have made the life insurance market more competitive than ever. Many policies have living benefit provisions and conditions, like high cholesterol and blood pressure that used to prevent good rates, are now eligible for preferred rates with standard medication.
Because different carriers all have different risk appetites, the only effective way to navigate the various underwriting criteria is with the services of an independent agent. Most good independent agents will have 50+ carriers to work with, and having more options is the best way to a great offer. So schedule a life insurance review with an experienced independent agent today.
This subject of an annual life insurance review is discussed in further detail at https://lifeinsurancehelpdesk.com/annual-life-insurance-review/
James P. Tobin, CFP® operates the web site lifeinsurancehelpdesk.com