When to review your life insurance policy
Let's review the different occasions when it may be a good idea to check in on your life insurance policy.
When should you review your life insurance policy?
Unlike some aspects of your financial portfolio, it’s important to take a hands-on approach to your life insurance. In general, it’s usually a best practice to review your policy at least once a year.
With your annual insurance review, major life events — like marriage, divorce, new children, promotion or job loss — are also occasions when you should review your coverage. Policy reviews will help you manage all there is to consider when it comes to your life insurance needs.
What should you do during your life insurance review?
Reviewing your coverage amount is a great place to begin. Your coverage amount is what will be paid to your loved ones after you’re gone. It’s important to have enough coverage that will help pay your family’s expenses. Take a yearly assessment of what those expenses are. If you need to change your coverage amount, during your review would be a good time do so.
Confirming your beneficiaries’ information is up to date is also something you should do during your insurance review. Accurate beneficiary information can help ease the stress of receiving your policy benefit during an already difficult time. And don’t forget to name a backup beneficiary in case your primary beneficiary unexpectedly passes or is unable to receive your benefit.
Examining any changes to your policy’s terms, conditions and exclusions is another crucial aspect of your life insurance review. This will keep you updated on what’s covered, how your benefit is paid and the conditions of your premium.
Understanding any changes to your premium is beneficial to helping you stay in budget. If you want to adjust your premiums, your review may be an appropriate time to reach out to your insurance company or check out other options.
When else should I review my policy?
A major life event is another excellent time to review your life insurance policy. Let’s explore some different examples and why.
1. Family changes
Bringing a new baby into the world is an incredible moment. Taking on elderly parents or other dependents also lets you care for those that once supported you. But as your family expands, so do your costs.
A recent marriage sparks many new beginnings. Reviewing the terms of your policy can help you prepare for a life together. And if you’re married and both spouses have children, it could be better to get coverage appropriate for a larger family.
After a divorce, you may need to update your beneficiaries. In some states, that process is initiated automatically. In others, you’ll have to make the change yourself. After removing a beneficiary of a life insurance policy, it’s necessary to add a new one. That could be your children, siblings, parents or even close friends.
If you’re a new grandparent or your number of grandkids keeps growing, you may want to consider expanding your coverage as well.
When your kids move out for college or a new job, it may feel like a time to consider decreasing your coverage. But that’s not always the case. College tuition is expensive, and the early career job market can be volatile. Reviewing your policy after changes like these helps you re-evaluate your coverage needs and effectively protect your family with life insurance.
2. Health changes
Life insurance companies like to reward healthy habits. If you’ve taken action to live a healthier life by quitting smoking or losing weight, you may qualify for lower premiums. If you’ve retired from unsafe jobs or risky hobbies, you could also get better rates.
Although, if you’ve been diagnosed with a serious illness — mental or physical — keep in mind how this could impact your premium.
If your term life policy is set to expire, a diagnosis for a serious illness could complicate the process of getting more coverage or converting to a whole life policy. Consider exploring other available options like guaranteed acceptance life insurance.
Taking time for a life insurance policy review in instances of changing health helps you weigh your needs for additional coverage or potentially get better rates.
3. Additional debt
Taking on additional debt is a prime occasion when you should review your life insurance policy.
If you just took on a mortgage to buy a new home, ensuring your loved ones will be able to make those payments is essential to their wellbeing. Other large loans like car payments should also require proper consideration.
If you’re the sole household provider, it’s helpful to adjust your policy to help your loved ones make those payments on their own.
4. Job changes
Job changes are another important time to review your policy.
A promotion at work is something to celebrate. With more income, your budget could increase. In contrast, job loss restricts what you can afford. Without money coming in, you may need to switch to a more budget-friendly policy.
After a job change, it’s important to determine the right amount of coverage for your needs and budget. If you’re struggling and need advice, reach out to your insurance company to see what alternate options may help.
Don’t forget, you can convert your term to whole policy
If you have term life coverage, it’s set to expire at some point. But you could switch your term life insurance policy to whole life. There are many unique benefits of whole life insurance like fixed premiums and permanent coverage as long as you make your monthly payments.
And it’s always good to shop around
To make the most financially responsible decision, it may be good to compare coverage options to get rates that best fit your needs and budget. Even if you’re satisfied with your current policy, your annual review is an ideal time to compare costs elsewhere.
TruStage™ Life Insurance is designed to meet your current needs and adjust to life’s future circumstances. Get a quote today to help explore what coverage could be right for you.
