Is Your Life Insurance Policy Overdue for an Update?
The new year presents an opportunity for reflection and renewal after the busy holiday season, and many of us use January to check in with ourselves and our goals. You might also use this time to do a reset, checking and changing smoke detector batteries, cleaning out closets and pantries, getting your financial history in order (especially with Tax Day coming sooner rather than later). But did you know it’s also an important time to check in with your financial goals? Your life insurance policy is an important part of your financial future, but if you’re like most of us, you probably haven’t thought about your policy since you bought it. A life insurance plan isn’t like a slow cooker, though – you can’t set it and forget it. It’s important to review your policy regularly and make sure it still fits your needs and expectations.
There are several reasons you might need to adjust your life insurance policy, and this month is a great time to do that. New year, new policy? Could be time. Here are the top reasons you might want to update your life insurance plan now.
1. Change In Your Beneficiaries
If your policy was written many years ago, your life circumstances may have changed and along with them, your beneficiaries. If you were single when you took out the policy and have since married or partnered up, you might want to add your spouse or partner to your plan. Ditto if you have had kids since the plan was written. You’ll want to make sure your children are provided for in any life insurance plan you purchase. Or circumstances might have changed and you want to remove a beneficiary or beneficiaries.
A qualified insurance broker can help you adjust the beneficiaries on your plan with minimal hassle. This might include adding additional coverage, especially if you have added members to your family.
2. Other Big Life Events
Changes in family status are not the only reason to review and update your policy, though. If your financial circumstances have changed – you’ve incurred a new mortgage, paid off all your debt, or have a major expense looming such as college tuition or house renovations, you’ll want to revisit your policy to make sure you’re allocating funds each month where they need to be.
For instance, if you’re debt-free, you might want to start investing more in your life insurance plan to help provide income later in retirement. Some life insurance plans can be drawn on while the insured is still living and make great investment tools. If you have a new mortgage, you’ll want to make sure your beneficiaries can continue to pay it after the end of your life, if need be. And if you have a big expense coming up, you may want to explore how and if your policy can help you cover it.
3. Term Conversion Opportunities
Another reason to review your life insurance plan now? It could be time to make the switch from term to permanent, or to adjust the protection period on your plan. Or it may be time to consider switching to a new form of permanent life insurance, such as universal life. Need a refresher on term vs. permanent insurance? Read on.
Term Life Insurance
An affordable way to protect your heirs for a specified amount of time
Guarantees benefits for a period of 10, 20 or 30 years
Expires after the term
Permanent Life Insurance
Can be a powerful investment tool while providing important financial protection for your family in the event of the unexpected
Helps build cash value that is usable during your lifetime
Provides equity
Ensures expense coverage – does not expire
It also may be time to add new coverage, such as long-term care. Did you know that 70% of individuals over the age of 65 will need long-term care, and the majority of these expenses are not covered by traditional health insurance, Medicare or Medicaid? An affordable add-on policy can make the difference between financial comfort and financial crisis later in life.
3. Gaps In Your Work Benefits or Group Coverage
The final reason to take a look at your life insurance plan now? To make sure you’re prepared in the event of an employment change – if you leave or change your job and have been relying on group coverage for insurance, you probably won’t have the coverage you need. By accounting for a potential change in work benefits ahead of time, you can be sure you’re covered in the event of the unexpected.
The reality of life insurance is that we so often don’t think about it until we need it most. That’s fine if we have all the coverage we need, but can be a disaster if we don’t. By taking some time at the beginning of a new year to do a proper inventory of your insurance needs, you can make sure that you and your loved ones are effectively protected through all seasons of life. Ready to take a new look at your insurance and financial picture? Drop us a line.