How often should someone review his or her life insurance policy? Once you have purchased a life insurance policy, it is important to review it on a regular basis. Once you have purchased a life insurance...
Once you have purchased a life insurance policy, it is important to review it on a regular basis. Joe Sostarich, a 26-year veteran of life insurance sales and management tells us, "It is important to review your life insurance policy at least once a year or whenever something changes in your family." There are many events in life that can affect your personal needs in a life insurance policy and the way you will want the proceeds to be distributed when you die.
Every time there is a major event in your family, you might want to revisit your life insurance policy. If you have just purchased a home you may want to purchase additional life insurance to cover the mortgage on your home in the event of your death. When you die you will not want your surviving loved ones to have to worry about how they will pay the mortgage without your income. Additional insurance might also be considered if you have recently refinanced your home or taken out a second mortgage.
If you come to realize that you have aging parents or family members with disabilities you may want to consider changing your life insurance policy to protect them and their futures. Life insurance policies can often by changed to include annuities that would help pay for long-term care in a facility for an aging parent or spouse. If a spouse or loved one develops a serious health condition you may want to increase the amount of your insurance to help pay for his or her medical expenses and care once you are gone. If your children have grown and your spouse is self-sufficient or you are single due to divorce or death you may decide you need less life insurance.
If you have begun to think about retirement income you might want to take a look at your life insurance policy to consider switching to a whole life policy that pays an annuity. If you have recently inherited money you may want to invest it in a Universal Life policy that will earn you an investment or a life insurance trust that will help to pay the estate taxes of the money you leave to your heirs.
The beneficiaries of your insurance policy should be reviewed regularly as well. Joe tells us, "Any time you have a major change in the status of your family it is a good idea to revisit your designated beneficiaries and the exact wording in your policy." Any time there is a divorce or a marriage in the family it is important to see how this affects the beneficiary status of the policy. If there is a new child born into the family you may want to include him or her in the beneficiary list as well. Deaths in the family can also drastically affect the way you have set up your beneficiaries.
Periodic reviews can also be useful for making sure that your insurance company has all of your latest contact information. Be sure the proper phone numbers and addresses are included on your policy and the current addresses and names of your beneficiaries as well. It can also be useful to include the social security numbers of your beneficiaries to ensure that they can be found in the event of your death.
