Life isn’t static—that’s no surprise. So if life changes constantly, why shouldn’t your life insurance change with it? Keeping your life insurance in step with your busy life with regular policy reviews helps you better maximize the benefits your life insurance policies have to offer.
Let’s discuss 4 reasons why now may be a good time for a life insurance review.
1. Changes to Your Lifestyle
A primary objective of life insurance is to provide your family with the financial security necessary to maintain their lifestyle in the event of your passing. Accordingly, it’s essential to keep your life insurance policies up with your lifestyle by reviewing your coverage as your wealth and financial obligations change. If you’ve been granted a promotion with a raise, took on a larger mortgage to buy a new home, or invested in a vacation home—you guessed it—it’s time for a life insurance review.
Positive lifestyle changes, like losing weight, quitting smoking, or controlling a health issue like high blood pressure, may put you in a lower risk category for life insurance and help you qualify for lower rates. The same applies if you’ve stopped engaging in hobbies, jobs, or activities considered risky by insurance companies, like mountain climbing or scuba diving.
2. Changes in Your Family
Family and relationship changes—such as births, adoptions, marriages, remarriages, divorces, and deaths—require a review of your beneficiary designations to ensure the proceeds go where you intended them to go. Some families realize too late that beneficiaries are outdated, and an ex-spouse receives the entirety of the insurance benefits, or younger children are left out. Naming someone in your will or trust will not override the beneficiary listed on your insurance policy, so it’s necessary to keep your beneficiary designations current.
Additionally, you’ll want to review your policy coverage as your family changes. If your family has grown, you may want to ensure that your policy will cover your children’s educational needs. On the other hand, if your children have grown and are no longer dependent on you, you may have less need for life insurance.
3. You Want to Understand Your Policy
An underrated, but no less important, reason to review your life insurance is to make sure you understand what kind of policy you have, its unique costs and features, and if it’s the best policy for your needs. Life insurance has evolved into a more valuable and robust risk management tool throughout the last few decades, with riders to cover chronic illness and long-term care, as well as savings and investment features. There might also be valuable benefits in your policy that you can use during your lifetime.
Term life insurance provides coverage for a specified length of time, ranging from 10 to 35 years in some cases. If you have a term life policy, check your term expiration and consider your options for renewing your policy or converting to a new, whole life policy, if needed.
Whole life and universal life insurance are permanent insurance products that don’t expire as long as you pay the premiums. If you have a whole life policy, check when your premiums will be paid up. Some policies charge premiums for a specified number of years, while others charge premiums for the duration of the policy. Additionally, many whole life policies pay dividends that you can use to purchase additional paid-up insurance or apply them to premium payments to offset the cost.
Universal life policies have premiums that can be adjusted over time and may have an increasing death benefit. They may also have a cash value component tied to an index like the S&P 500 or in a separate investment account. As a result, it’s helpful to review universal life policies regularly to evaluate their performance and benefits.
4. You Own a Business
Business owners have their family and business partners and employees relying on them, requiring special consideration when determining life insurance needs.
For your personal life insurance, consider your obligations associated with the business—such as business loans, a line of credit, or long-term obligations to vendors—that could be due at your passing and put your family’s financial security at risk. Life insurance can provide your beneficiaries with the cash they need to cover any short-term or long-term business obligations.
Business life insurance can help keep the business running after you pass away. Key-person life insurance and buy-sell agreements with life insurance are important considerations in protecting your business, partners, and employees.
Feeling Overwhelmed?
You don’t have to be an insurance expert, you just have to know who to ask. Get unbiased answers from T.A. Holland & Co., a team with the number-one goal of creating practical risk management solutions to help our clients accumulate and preserve wealth.Reach out to us at info@taholland.com or 617-523-5656 to schedule a complimentary appointment so we can get to know each other and see if you’re due for a life insurance review.
About T.A. Holland & Co.
T.A. Holland & Co. was founded in Boston, Massachusetts, in 1920, and serves individuals and businesses throughout the country. We provide cutting-edge financial services with a broad array of solutions to help our clients grow and preserve their wealth. We have seen good and bad economic times. Through it all, T.A. Holland & Co. has thrived by always making the customer our #1 priority. We get to know you and understand your needs so we can provide you with the proper guidance and strategies. Our senior vice president, John Hellmuth, has been at the helm of T.A. Holland’s financial services since 1990, but he doesn’t do this job alone. He is joined by his two children, Lindsay Hellmuth and Thomas Hellmuth. As CERTIFIED FINANCIAL PLANNER™ practitioners, our financial services team has the knowledge and experience to help you solve your most pressing financial challenges. To learn more about how we can help you, visit our website and reach out to us at (617) 523-5656 to schedule a complimentary get-acquainted meeting.