According to the National Association of Insurance Commissioners (NAIC), it's important to regularly review and update your life insurance policy with your agent or life insurance company every few years to keep up with changes in your income and needs.1 Unfortunately, too many Americans buy a life insurance policy to protect their family and fail to set aside the necessary time to regularly review their coverage.
We get it. Your life is busy and it can be difficult to find the time to do many of the things you know you should get done. Reviewing your life insurance coverage every few years is a good rule of thumb, but there are certain situations that are clear indicators that you should consider updating your policy. The following are our top three picks.
An increase of dependentsDid you have or adopt a new baby? Are you caring for elderly parents? Has your adult child become disabled and needs your support? Did you recently get married? It stands to reason that if the number of people who depend on you for financial support increases, you should consider looking into updating your family life insurance policy. Note: Increases in coverage amounts may be subject to additional underwriting. Not all policies allow for coverage increases.
You bought a new homeMost people who buy a home take out a mortgage. This means committing to a financial obligation that could last up to 30 years. If you were to die tomorrow, how would your family make the monthly mortgage payment? Debt that you take on can become a significant burden on the people you love if you don't plan for the unexpected. If you just purchased a new home (or taken on any other type of large debt), it might be time to discuss increasing your coverage.
You're uneasy with your life insurance company
Sometimes, what may seem like a good life insurance company at the time turns out to be not such a stable choice in the future. If your life insurance company has had a downgrade in their financial rating, then it might be time to do some shopping. Life insurance is one of the most important types of insurance that you can own. By making your required premium payments, the life insurance company makes a promise to pay your beneficiary a death benefit when you die. If you're feeling uneasy about your life insurance company's financial stability and ability to pay claims, then perhaps it's time for a change. To read more about life insurance company ratings, read our article on Life insurance company ratings: Why they matter.
Note: It may not always be in your best interest to switch life insurance companies. You'll have to consider any surrender charges, unpaid loan balances, and potential tax implications. If for whatever reason you are not happy with your current insurer, be sure to discuss your concerns with your agent or life insurance company representative first, before making a change on a current policy.
For more information on when you should review your life insurance policy, visit the Protective Learning Center.