Three Reasons to Review Your Life Insurance

One of the most important aspects of any well-rounded financial plan is life insurance, but it’s also one of the areas that most people spend the least time thinking about. Nobody likes to think about life insurance because it forces us to think about death and how our loved ones will handle our death. However, a thorough review of your life insurance situation can help you to rest assured that the people you care about most will be taken care of if you’re no longer here to provide for them. Most people buy a life insurance policy at some point, make their payments, and forget that they own it. There are several good reasons to periodically review your insurance situation.

- Better Terms and Rates: Not all life insurance policies are created equal and not all companies offer the same rates. The insurance industry is extremely competitive and companies work hard to keep their rates reasonable compared to their competition. Coupled with the fact that people are living longer than ever before, the actuarial tables look different today than they did even a few years ago. If your policy is more than 3 years old, there is a good chance that you can either find more coverage for the same premium or the same amount of coverage for a smaller premium. Deal with an agent that represents multiple companies to ensure that you’re finding the best available policy for your situation.

 - Many Jobs Offer Life Insurance As a Benefit: A growing number of employers are adding life insurance to their benefit package. Most of the time the amount of coverage is based on your salary, your length of service, and other factors associated with your job. In most cases, this insurance is not enough to provide for your loved ones in the case of your death, but it’s a start. Ask your Human Resource department about whether or not insurance is available to you. If you have a $100,000 policy as part of your benefits package, you can purchase a smaller policy to supplement that coverage. Many employers offer supplemental insurance at a reduced rate that doesn’t require any type of medical examination or background check.

 - Your Situation May Have Changed: The most basic reason to review your policy is that your life may have changed since your last insurance review, thus changing the amount of insurance you need. For instance, if your family has grown or if you have moved into a more expensive home, you may need more insurance. Likewise, if your children have graduated from college or you have paid off your home, you probably need less insurance. As your situation changes, you should review and adjust your life insurance policy.

Finally, many people wonder about how much insurance is enough, and the answer is different for everyone. Some people choose to follow a simple formula, such as ten years worth of living expenses. This is a good starting point, but most insurance professionals have tools that can examine your specific situation and tell you how much insurance you need and what type of insurance is best for you. Having the right policy in place will help you to sleep better at night knowing that you’ve taken care of your family if something unexpected is to happen.