When you first purchased life insurance, you and your financial representative made sure the policy fit your unique needs. But life doesn't stand still — just think of everything that's changed since you purchased your policy.
Fortunately, a periodic review could help ensure that your policy still fits your life insurance needs.
A Review of Your Life Insurance Needs
During an insurance review, you and your financial representative go over your existing policy and financial plan. First, you'll review what you already have in place. (If you don't quite remember the technical details, you'll get a refresher on how everything works.) Next, your financial representative will run you through a "fact-find" questionnaire to see whether your financial situation and life insurance needs have changed. Based on this review, your financial representative can tell you whether your plan is still appropriate, or if there are adjustments worth considering.
One of the benefits of a life insurance review is you can confirm if your coverage still offers enough protection for your loved ones. This confirmation could help them avoid any unnecessary hardships due to a lack of appropriate coverage if you pass away unexpectedly. Your financial representative can also update the beneficiaries of your existing policy. For example, you may have chosen your parents as your beneficiaries when you first signed up but would now like to list your new spouse as your beneficiary instead.
An insurance review also provides an opportunity to check up on your other financial goals, such as retirement. Your financial representative can help you develop a plan to help reach your retirement goals. They can also check whether there are other opportunities worth considering — like converting your term life insurance policy into permanent coverage, such as whole life insurance or universal life insurance.
A Question of When
There's no universal "right" time to review your life insurance policy, as it depends on your individual needs and how much your life has changed since you first purchased it. If your financial situation continually changes, for example, it could be helpful to review your life insurance needs more frequently than someone whose life may be more consistent. Generally, it may be beneficial to schedule a review whenever you enter a new life stage.
These significant life stages could include:
- Going away to college
- Entering the workforce for the first time
- Getting married
- Buying your first home
- Starting a family or having another child
- Changing careers or getting a pay raise
- Entering retirement
Entering any of these life stages could impact your financial situation and the type of life insurance you may need. Imagine you recently got married or had a child. Congratulations! But now you have additional family members who may depend on you and your income. As a result, you may need more life insurance coverage for these extra financial needs. And when you change jobs, it could be helpful to figure out whether you'll lose any life insurance benefits from work and (if so) plan what you could do to replace it with personal life insurance coverage that is not dependent on your employment.
A review can still be helpful even if you haven't entered a new life stage, as it could help give you additional peace of mind to know for sure that you have the right life insurance coverage for your needs. Consider scheduling an annual financial review with your financial representative. Having an annual financial review meeting doesn't necessarily mean you'll be changing your life insurance coverage every year. Typically, these meetings will be a quick confirmation that everything is still in good shape. If you schedule a review once a year, you could also keep the details of your policy fresh in your mind, and you'll be more likely to adjust when it's needed quickly.
It doesn't take much to keep your life insurance coverage in order. With regular policy reviews, you can rest easy knowing your plan is up-to-date — no matter how much your life may change.