Out of sight, out of mind. That’s how most of us approach life insurance. You bought your policy and did your job of protecting your family, so you’re good, right? Maybe. But maybe not. Life insurance is not supposed to be a set-it-and-forget-it financial product. It’s great that you have a policy, but if you don’t review it, how can you know it’s working for you if you don’t check in every once in a while?
A life insurance review, as unexciting as it sounds, may be necessary and beneficial. Best practice suggests reviewing your life insurance policy every year. Whether that’s a quick review of your financial situation and family circumstances or an in-depth analysis of your policy and its benefits, here’s what you want to consider during a life insurance review.
1. Have You Experienced Any Life Changes?
When you originally chose your policy amount, you most likely made your decision based off your mortgage amount, other debt, future college costs, and your family’s living expenses. If anything in your life changes in a way that affects those things, your life insurance coverage may need to change as well.
For example, if you added another child to your family, you might want to increase coverage. If you got a new mortgage or added any other debt, your liabilities will increase and your policy should reflect that. Or maybe you’ve put your kids through college, have steadily growing savings, and have paid off the mortgage. Do you need as much coverage as you did when you had young children around and less money to spare? Any time you reach a new life milestone or experience a major change, review your coverage and update your beneficiaries.
2. Is Your Policy Outdated?
Just like technology, insurance policies can become outdated as well. Throughout the last few decades, life insurance has evolved into a more valuable and robust risk management tool. Today’s policies can cover more than just premature death. There are options to cover chronic illness and long-term care, and they can direct policy cash values among multiple options—not just the insurer’s general account.
If it’s been a few years or decades since you first purchased your policy, you may need to add additional coverage, such as long-term care, with a rider, which can be more cost-effective than buying a separate policy.
3. Is Your Policy Performing Well?
If you have a whole life policy with cash benefits, how do you know if your life insurance policy is performing as expected? When you purchased the policy, you were most likely provided a projection of values, but have you seen an updated estimate since then? How would it compare to what you were originally shown?
Your policy may be outperforming its original projection, but there’s also the risk that the policy has underperformed. If so, what might that mean for you and your plans for your loved ones?
Now may be a good time to update your projections and ensure they are on track. Most often, it’s easier to adjust a policy before it goes too far off course. Your advisor can help you evaluate how the policy has performed since you purchased it and how it is projected to perform in the future.
You already have enough on your plate without adding another financial task to the mix. But you shouldn’t gamble with your family’s financial future. If you aren’t sure if your policy is right for you or if you’ve been through life changes that warrant a second look, we at Harbor Wealth Management can help you examine your policies in depth so that you can have increased confidence that your plans are on track. Schedule a phone call now to get started!
About Jeremy Smith
With nearly two decades of experience in the financial services industry, Jeremy Smith serves as a dedicated and knowledgeable financial advisor and the founder of Harbor Wealth Management. He specializes in serving retirees, pre-retirees, small business owners, and widows, providing a comprehensive array of investment management and financial planning services. Jeremy aims to serve his clients as a financial guide who is here for their every need, helping families find lasting plans so they can focus on what matters most to them. To learn more about Jeremy, visit www.myharborwm.com or connect with him on LinkedIn. You can reach Jeremy directly at email@example.com or by calling his office at 985-605-7185.
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. You should discuss your specific situation with the appropriate professional.