Even if you know how important it is to have a life insurance policy in place to protect your loved ones, scheduling a regular life insurance review probably isn’t on the top of your to-do list. Many people don’t even realize they need to review it.
But a life insurance review, as unexciting as it sounds, 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. Life Changes
When you originally chose your policy amount, you most likely took into consideration your mortgage, 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.
If you add another child to your family, you might want to increase coverage. If you get a new mortgage or add any other debt, your liabilities 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. Outdated Policy
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. Policy Performance
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 For A 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 can help you examine your policies in depth so that you can have increased confidence that your plans are on track. Reach out to us to schedule a meeting by calling (626) 529-8347 or emailing Ricky directly at email@example.com.
About Haydel, Biel & Associates
Haydel, Biel & Associates is an independent financial advisory firm serving individuals and families near Pasadena, California. The firm was founded in 2004 by Chris Haydel and Ricky Biel with a desire to provide unbiased, client-centered, community-based financial advice. Together, they have built a practice that has grown into a family of caring, smart professionals committed to blending proven investment methodologies with creative financial technologies that make it easier than ever to accomplish your goals. They strive to keep things simple and fun to give their clients peace of mind and alleviate financial stress. HBA Wealth takes care of their clients’ needs first and foremost and goes the extra mile to make their clients’ finances grow. To meet and see how the HBA Wealth team may be able to help, contact them today at (626) 529-8347 or email Ricky directly at firstname.lastname@example.org.