If you’re like most Americans, your life insurance policy is probably the last thing on your mind. Chances are, you made your first payment, locked your policy in the safe, and haven’t looked at it since.
We get it, the last thing you want to do in your free time is thumb through your policy page by page to review the coverage you signed up for how ever many years ago.
While the policy you have may be a perfect fit for your needs, overtime, most people’s need for life insurance change – which is why we recommend reviewing your policy at least once a year. Other life events may also affect your life insurance coverage needs too…
15 Reasons to Review Your Life Insurance Policy:
- You’ve Moved or Changed Addresses
- You’ve Changed Banks or Credit Cards
- Your Employee Provided Coverage Has Changed
- You Have A New Job
- Your Health has Gotten Better
- Your Heath Has Gotten Worse
- Your Mortgage Is Paid Off
- You’ve Purchased a New Home
- Your Children Have Moved Out
- You’ve Reached Retirement Age
- You’ve Given Up a Dangerous Hobby or a Bad Habit
- Your Coverage Needs Have Changed
- You’ve Remarried or Divorced
- Your Policy is About to Expire
- Your Policy Has Increased in Cost
If you’ve moved or changed addresses since you purchased your policy, we recommend contacting your life insurance company and your agent to let them know. You’ll want to review any information you receive from your insurer in the mail to prevent missing notices about conversion deadlines or missed payments.
If you’ve changed banks or if your policy is paid with a credit card, you should review your policy payment information to prevent your policy from accidentally lapsing. While some companies will allow you to reinstate your policy if you’re only a month or two behind, other companies will automatically cancel your policy if your payments are more than 30 days behind.
Over the last few years, many businesses have been forced to cut back on their life insurance programs to help supplement the increasing cost of health care. If you purchased your life insurance through work we recommend reviewing your coverage to make sure your policy is still in place and your benefits haven’t changed. In addition, some policies increase in cost every year, so you may be probably better off buying your own policy outside of work and locking in a low rate.
If you’ve recently changed jobs, we recommend reviewing your current employer’s life insurance options, especially if you don’t have your own policy outside of work. If you’re in average or better health, you’ll save money by buying your own policy, but if you’re a heavy smoker or are in poor health, buying life insurance from your employer may be your best option.
If your health has improved since you’ve purchased your life insurance policy, you may want to consider reapplying for a better rate.
As an example, we’ve worked with clients who are diagnosed with high blood pressure, high cholesterol, or elevated blood sugar during their initial life insurance exam. Once these minor health issues are being treated and are considered well-managed, some people may qualify for a lower rate.
If you have serious health issues that may prevent you from qualifying for another life insurance policy, we recommend reviewing your policy to determine if you have an option to convert your policy into permanent coverage. Also known as a conversion rider, many term policies will allow you to convert some or all your term coverage if your term hasn’t expired. However, all policies have age restrictions that you don’t want to miss.
Congratulations, you’ve paid off your home! Now that most of your debt is gone, do you still need as much life insurance? Time to review your policy. Most term life insurance policies will allow you to reduce your coverage, and your monthly bill at least once.
If you’ve purchased a second home, or if your overall debt has increased since you purchased your last policy, it may be time to revisit your coverage. If you’re underinsured, a 10 or 15-year term policy may provide you with just enough coverage to bridge the gap.
If your children have moved out and graduated or become self-sufficient, you may not read to carry as much life insurance as you have in the past. You may want to review your policy to determine your options for decreasing your life insurance policy or converting a percentage of it into permanent coverage.
When you reach retirement, your life insurance needs will likely change. One of the most common reasons for purchasing life insurance at retirement age is to maximum your pension strategy. Pension maximization involves purchasing life insurance instead of accepting a joint or survivor pension plan with a reduced monthly payout.
If your employer doesn’t offer a pension, and no longer need to provide a source of replacement income for your spouse, you may want to consider purchasing life insurance to leave and inheritance behind, protect your estate from taxes, or to settle any debts, medical bills, or final expenses that you may leave behind.
If you’ve recently decided stop using your pilot license, sold your scuba diving gear, or quit smoking, you may be able to save money with a new life insurance policy. Private pilots or pilot instructors typically pay more for their life insurance, and it shouldn’t come as a surprise that smokers pay two to three times more than non-smokers for their coverage.
There are lots of reasons that your life insurance needs can change over time. If you’ve started a business, incurred additional debt, or if you want to leave an inheritance behind, it’s time to reevaluate your policy to make sure you have the coverage you need.
If your need for life insurance has decreased now that your house has been paid off or your children have moved out, you may be able to reduce your coverage and your monthly premiums. Most insurance companies will allow their customers to reduce their coverage if needed.
If you’ve remarried or gotten divorced, we recommend reviewing the beneficiaries listed on your life insurance policy. You may want to change your primary beneficiary to your current spouse or list your children as your primary beneficiaries instead. If you’re court-ordered to keep life insurance for your ex-spouse, you may want to consider decreasing your policy’s death benefit.
As an example, we recently worked with a client from New York who was ordered to provide his ex-spouse with twenty years of income replacement. As each year passed, he reduced his policy’s death benefit by $80,000, which saved him a considerable amount of money.
Your life insurance company will send you a letter before your term policy expires, but for some people this isn’t enough time to evaluate their options and secure new coverage. In addition, some companies will allow you to convert your policy into permanent coverage before your term expires and you don’t want to miss this opportunity.
If you have term life insurance, your term has probably ended so you’ll want to start shopping for a new policy. If you have a universal life insurance policy, your cash value may have been depleted sooner than you expected. Or you may have purchased a life insurance policy from AARP or your employer, in which your coverage likely increased in cost as you got older. In any of these scenarios, you’re better off buying a new policy with level rates that are guaranteed not to change.
Have Questions? Give Us A Call
If you have questions about your life insurance coverage, or if you’d like to compare rates for a new policy, feel free to give us a call. We work with more than 60 top-rated life insurance companies and have helped thousands of businesses and families with their life insurance needs.
Toll free 855-902-6494, or you can request a free quote online to compare rates from dozens of leading insurers in less than a minute. Our services are completely free, and there is no cost to apply for life insurance.