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Life Insurance Basics

Getting the most out of your life insurance review

A life insurance policy should be reviewed on an annual basis or whenever there are changes in your coverage needs, such as an unexpected disability, new debts or a divorce.
As your life situations change, so do your life insurance needs. That's why it's so important to keep your life insurance policy up to date. An easy way to ensure that your family is protected if you were to unexpectedly die is with a regular insurance review. This way, you can better identify the gaps and make sure you have enough coverage. But how often should you have a life insurance review? How do you go about assessing coverage requirements to make sure you're covered? And what other factors should you consider when reviewing your policy?

When to review your life insurance coverage

The National Association of Insurance Commissioners (NAIC) suggests that you regularly review your life insurance policy to determine if your coverage is still appropriate for your situation. In fact, most financial advisors and insurance professionals recommend reviewing your life insurance coverage annually. Your agent can help you make necessary policy modifications according to your present needs, as well as examine the potential for changes in the coming years.

Assessing your coverage needs

A number of factors can affect your life insurance needs. Consider the following factors when reviewing your life insurance coverage with your agent:

1. Changes in your financial responsibilities

Educational expenses, the cost of family health care, having to care for elderly parents or a special needs child - all present changes in your financial responsibilities. In fact, one in three households say they would immediately have trouble meeting everyday living expenses if the primary wage earner were to die today.1 An increase in your financial responsibilities might mean increasing your life insurance coverage. Be prepared to discuss changes with your agent.

2. An unexpected disability

In the event of an unexpected disability, how would you pay your life insurance premium? Would it become a serious financial burden to you and your family? Unfortunately, when disability strikes, a life insurance premium can feel like just another bill. For an additional cost, you can add a waiver of premium rider that will continue to pay your life insurance premiums if you are unable to work due to an injury or illness. Your annual review is a great time to ask your agent about policy riders that can help keep your coverage up to date.*

3. New debts

Have you taken out a mortgage, financed a new vehicle, or borrowed capital to set up a new business? An annual policy review is the perfect time to discuss any new debts with your agent so you can assess increasing your policy coverage accordingly.

4. Changes in beneficiaries

One of the most important decisions to make regarding life insurance is to whom to leave your benefits. During a regular review of your life insurance policy, take into consideration changes in your life, relationships, and family - such as births, adoptions, marriages, remarriages, divorces, and deaths - when updating your beneficiaries.
Your life insurance policy was never meant to be a set-it-and-forget-it document. By regularly reviewing your life insurance plan with a professional, you help ensure that your policy remains up to date and that you have adequate life insurance coverage over the long term for your loved ones.

1. Source: LIMRA Insurance Barometer - 2016 Data

*Not all companies or policy types offer waiver of premium. Ask your agent about what is included in your individual life insurance policy.



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