- Tenaya Insurance Services
5 Things That Should Trigger a Life Insurance Review
We always receive a number of questions from people about replacing or changing their life insurance policy. Whether they can no longer afford the premiums on their policy, or a recent widow is wondering whether she needs to beef up her existing coverage, or they are just unsure if they have enough coverage to suit their needs. Even though the scenarios that surround each person is different, there are specific life events that should always trigger a review of your life insurance policy.
Here are the top 5:
1). Family Changes (births, deaths, marriages, and divorces)
Whenever there is a significant life event in your family, it always makes sense to review your life insurance coverage. That's because these life changes usually drastically shift your financial responsibilities. Another good reason to make sure to review your policy during these events? If there are any beneficiary changes that need to be made to your policy, it's the perfect time to do it, and make sure you keep it up to date.
2) A change in your financial situation
Financial situations change. Whether you bought a policy 20 years ago, and the premiums are reaching a level that you can no longer afford, or whether you were laid off and can no longer keep up the premiums, but you still need coverage . . . before you just let the policy go, have a conversation with your insurance agent. You have options. Bottom line is that before you just drop a policy that you've been paying into, find out if there's a way you could keep it.
3) Tax-law changes
Tax laws change over time. If you end up having a taxable estate, life insurance is a great way to solve that problem and make sure that your beneficiaries will have the funds available to take care of the tax bill without having to make difficult decisions under a deadline. Uncle Sam isn't patient, and he wants his cut. The alternative could mean that your family will have to scramble to figure out how to pay the bill. It's never a good thing when your family has to make decisions like this under duress. Houses have to be sold, and accounts are drained to cover these taxes, which in turn ends up creating additional taxable situations.
Ideally if your retirement plan works, you will have enough passive income from investments and pensions to retire on. But what if your retirement account doesn't look the way you hoped it would? If your spouse wouldn't have enough income to survive if you were to pass away, life insurance is a way to create money where it didn't exist before.
5) Every year
As you can see above, many of these triggering events are hard if not impossible to foresee. And even if you know something is going to happen, there's no guarantee that you will be insurable when they do. That's why the most important trigger is time. And when it comes to life insurance, you will never be as young or as healthy as you are today. So it's important to make sure that you are having annual reviews of your life insurance policy with your insurance agent so that any triggering events that happen in your life can be discussed and any needed changes can be made.
Insurance is built to protect your family and your assets, so that your lifestyle and quality of life are shielded from everything life can throw at you. But you need to think ahead. You can't wait until you're lying in a hospital bed. The goal is to shield you from any foreseeable risks that can come, and adjust as needed.
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