How To Tell If Your Life Insurance Is On Track
If you signed on for a life insurance policy because it was offered through your employer, or it’s been a few years since you chose your plan, it’s time to see if that coverage still makes sense for your life. As life evolves – marriage, kids, better job – you’ll want to review your life insurance policy and see if a change is needed. Here are four questions to help you decide.
Do I have the right type of coverage?
It’s important to know if your life insurance policy is term or permanent. Term life insurance is usually less expensive but provides coverage – to include a payout to beneficiaries – for a defined amount of time. If you die within the coverage time frame, or term, the payout is distributed. If you live beyond the allotted term, the policy expires and there is no payout.
A permanent policy offers coverage for the entirety of your life. An option with this type of policy is to grow the principal through investments and accumulate tax-deferred savings. This policy is more fitting for long-term needs.
Am I paying too much?
Americans are living longer. On average, we’re living nearly a decade longer than we were 50 years ago. As life expectancy changes, the guidelines for determining policy premiums are updated. If you purchased a life insurance policy several years – or even decades – ago, it’s a good idea to call a trusted life insurance agent to have your policies reviewed. You may be able to obtain the same coverage for a lower monthly cost, or increase your coverage for the same premium.
How to review your life insurance policy:
Contact the provider your policy is with and ask for a review of your current coverage plan.
Call different insurance providers to get an idea of their costs. Their premiums may be lower than what you’re paying now.
Partner with a financial advisor or life insurance agent who has access to a number of different providers so they can compare the policies and premiums for you.
Should I increase my coverage?
Following major life events, like a marriage or having a child, it’s a good idea to review your policy to ensure you have enough coverage. However, those aren’t the only factors that can change the amount of death benefits your family will need. If you take a higher-paying job or have a major health change, you should consider if your current plan offers the coverage you need.
Does my policy fit my life (and after-life) goals?
Life insurance, although it can seem self-explanatory, is quite flexible. You can use a life insurance policy to get your estate in order. For example, some people obtain a policy for the sole reason of using the money to pay any estate taxes. Others hold a policy to gift the money to a favorite charity, church or university. Of course, the money can also be used to hand down to your beneficiaries.
The reason you originally purchased life insurance coverage may evolve over the years, which is a good reason to review your policy and make sure it falls in line with your life and what you want your legacy to be.
