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Life Insurance Policy Reviews: When and Why to Do Them

Life insurance is not a set-it-and-forget-it type of financial product. As life changes, so do your insurance needs. This blog discusses the importance of regular life insurance policy reviews and the key times you should reassess your coverage.


Image showing a person reviewing a life insurance policy with key life event symbols, emphasizing the importance of regular policy reviews.

Understanding the Importance of Policy Reviews

Staying Aligned with Life Changes

  • Begin by explaining why life insurance policy reviews are crucial, focusing on how changes in personal and financial circumstances can affect insurance needs.

  • Discuss the risk of being underinsured or overpaying for unnecessary coverage.


Key Times to Review Your Life Insurance Policy

Major Life Events

  • Highlight key life events that warrant a policy review, such as marriage, the birth of a child, purchasing a home, or starting a business.

  • Discuss how these events typically increase financial responsibilities, thus affecting life insurance needs.

Financial Milestones

  • Address financial changes like significant income fluctuations, paying off debts, or changes in investment goals, and their impact on life insurance coverage.

Health Changes

  • Explain the need to review your policy if there are significant changes in health, which might affect your premiums or the type of coverage you need.

Retirement Planning

  • Discuss how approaching retirement can change insurance needs, focusing on decreased dependency on income replacement and increased focus on legacy planning.


The Review Process

Assessing Coverage Adequacy

  • Offer guidance on how to assess if your current coverage is adequate, considering your current financial obligations and future goals.

  • Discuss the relevance of the policy's death benefit, term, and premium in light of your current situation.

Evaluating Policy Performance

  • For policies with an investment component, like whole or universal life, discuss the importance of reviewing investment performance and policy fees.


Updating Beneficiaries

Regularly Updating Beneficiary Information

  • Stress the importance of keeping beneficiary designations up to date to ensure that the policy benefits go to the intended recipients.


Considering Additional Riders or Changes

Adjusting Coverage with Riders

  • Discuss the potential need to add or remove policy riders, such as a waiver of premium or long-term care rider, based on changing needs.


Seeking Professional Advice

Consulting with Insurance Professionals

  • Highlight the value of consulting with insurance professionals during a policy review to ensure that decisions are well-informed and aligned with overall financial plans.


Conclusion

Regular life insurance policy reviews are essential to ensure that your coverage continues to meet your changing needs and provides the financial security you and your family require. By staying proactive and reviewing your policy at key life moments, you can maintain peace of mind knowing your insurance plan is as current and effective as possible.

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