Provided by Terry Garland and written by Indigo Marketing Agency, a non-affiliate of First Allied Securities, Inc.
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. Good job on making sure you have a policy in place, 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?
While a life insurance review may not make it into your top priorities, it 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. Has Life Changed?
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 Is Your Policy Outdated?
Just like technology, insurance policies can become outdated as well.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. How Is Your Policy Performing?
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.
Time To Review!
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 Golden Capital Management can help you examine your policies in depth so that you can have increased confidence that your plans are on track. Call us today at (515) 226-0115 or email firstname.lastname@example.org to get started!
Terry Garland is the founder and CEO of Golden Capital Management with more than 25 years of industry experience. He works with individuals, small-to-medium-sized businesses, and medical professionals, including physicians and dentists, allowing them access to a wide variety of specialized services and investment vehicles to fit their specific needs. He graduated from Drake University and attended the Wharton School at the University of Pennsylvania and is a certified wealth strategist and a registered principal. With offices in Des Moines, Iowa, and Carlsbad, California, he serves clients across the country. Learn more by connecting with Terry on LinkedIn.