By John Halterman
Life insurance. You know you need it, but you probably don’t want to deal with it. Most of us buy our policy, hope that we are properly insured, then wash our hands of the process. But would you do this with your budget? With your wealth strategy? With your health insurance? Life insurance is not supposed to be a set-it-and-forget-it financial product. It’s great that you have a policy, but how can you know it’s working for you if you don’t review it every once in a while?
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. Has Life Changed?
When you originally chose your policy amount, you most likely made your decision based off how much you owe on your mortgage, other debt you hold, future college costs, and your family’s living expenses. If any of these things change, 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 Obsolete?
Just like technology, insurance policies can become outdated as well.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 even 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. Is Your Policy Up To Par?
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. Usually, it’s fairly simple 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.
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.
At Beacon Wealth Management, we don’t want your family to suffer because you didn’t have the right coverage or policy type. It’s just not worth it. If you’re ready to dust off that old insurance policy and make sure it’s exactly what you need, call (304) 626-3900 or email me at firstname.lastname@example.org.
John Halterman, best-selling author and nationally published blogger, has been featured as a financial guest expert on the shows of self-help gurus Brian Tracy and Jack Canfield, author of Chicken Soup for the Soul, and has appeared on ABC, FOX, BRAVO, NBC, CBS, and A&E. John is the expert host of the weekly WDTV News 5 segment “Solutions 4 Financial Independence.”
As an authority on wealth management, he has been invited by hundreds of institutions such as universities, federal agencies, professional associations, and large energy and utility corporations to be a guest speaker and educational event host. Event topics include retiring ready, managing down market investment risk, how to reduce your tax burden, and transferring your family wealth in the most tax advantageous way.
John is the founder and owner of Beacon Wealth Management, specializing in helping entrepreneurs, professional practitioners, and retirees overcome the 5 major challenges facing successful families. He is a warm communicator with a passion for helping people transform their financial futures. John understands the multifaceted set of financial worries people face as they become more successful and enter the Retirement Red Zone. He empathizes personally with each client and delivers a collaborative client experience that empowers people to reach their life goals.
With more than two decades of experience, John’s professional credentials include Certified Wealth Strategist, Accredited Investment Fiduciary, Certified Estate Planner, Chartered Federal Employee Benefits Consultant, Professional Plan Consultant, and Registered Financial Consultant. He is also a past member of Ed Slott’s Master Elite IRA Study Group.
A native of Weston, West Virginia, John served in the United States Air Force prior to becoming a wealth advisor. Today, he resides with his family in Clarksburg, West Virginia. He and his wife, Lisa, have been married since 2005 and have three amazing children. A family-oriented man, he enjoys giving back to his community, coaching youth sports, landscaping, architectural design, and playing racquetball.