Why and How to Review Your Life Insurance Policy: Key Steps for Updating Coverage

Why Should You Review Your Life Insurance Policy?

A review can show if your coverage is still in line with your objectives, if you're over-insured, or if you can find a more affordable option. It can also help identify any gaps between your current coverage and your future goals. An experienced financial professional can guide you through this process.

It's important for everyone to review their life insurance, especially if you're entering a new phase of life. Life stages that might prompt a review include:

• Welcoming a new child, either by birth or adoption

• Getting married, divorced, or losing a spouse

• Starting or making changes in your business

• Buying a new home

• Children moving out

• Changing jobs or receiving a promotion

• Significant financial changes like losses, gains, or receiving an inheritance

Checklist for Reviewing Your Life Insurance Policy

If you're going through any of these life changes or preparing for a new chapter, here's what to consider before talking to your financial advisor:

• Protection

  • Income Protection: Will your current policy's death benefit provide enough for your family to maintain their lifestyle or continue your business smoothly if something happens to you?

  • Estate Protection: Does your death benefit cover estate taxes or your wealth transfer goals?

• Cost

  • Are you getting the best price for your policy?

  • Could you find a more cost-effective solution now, especially if you're younger and healthier?

  • Would a re-evaluation of your health improve your premiums?

• Ownership and Beneficiaries

  • Is your policy ownership set up to meet your estate planning or business needs?

  • Are your beneficiary designations up to date?

  • Have you addressed your plans for succession, employees, or heirs?

• Type of Policy

  • Does your policy type (term, whole, universal) still align with your objectives?

  • What employer-provided or other life insurance do you have?

  • If you have term insurance, what will you do when the term ends?

  • Can you convert your policy to permanent insurance, and when is that possible?

• Supplementary Benefits

  • Do you still need any optional riders (add-ons) that are part of your policy?

  • Are there any new riders that could benefit you, like adding a Children's Insurance Rider, which allows your child to convert their term insurance to permanent insurance at 25?

• Cash Value and Performance

  • Is your policy’s performance meeting your goals?

  • Does your policy have enough cash value to sustain itself or meet other financial goals?