Shopping for life insurance—and, indeed, any kind of insurance—is not a one-and-done kind of deal. As your circumstances change, you will likely find that your life insurance coverage and add-ons need to change as well. After all, life insurance is one of the most important components of your financial plan to make sure your loved ones are protected if you pass away.
The truth is, you don’t know when your family is going to need your life insurance benefits, so you should conduct a life insurance review annually with your financial advisor to ensure appropriate coverage. But sometimes you experience life changes so significant that you need to review your policy more often. Here are 4 other reasons why you may be due for a life insurance review.
1. Change In Marital Status
When you experience a change in marital status, it’s time to review life insurance. Married people quickly learn to rely on each other’s income and build a lifestyle that can only be supported by their combined earnings. And if you’re the only spouse that works, it’s even more important to make sure your spouse is protected financially should the worst happen.
If you get divorced, review your beneficiary designations, especially if the divorce is less than amicable. Some families realize too late that beneficiaries weren’t updated, so an ex-spouse receives the entirety of the insurance benefits. Don’t let this happen to your family.
2. Birth Of A Child
As your family grows, more people become dependent on your income. Children (God bless ’em) are a huge expense. You should review your life insurance policy anytime you welcome a new member to your family. With proper coverage, your surviving spouse will be able to comfortably support the family for a long period of time while figuring out next steps.
Additionally, you may want to make certain that your policy will cover your children’s educational needs. Enough life insurance to cover college tuition may offer the greatest peace of mind—and ensure your children are prepared to support themselves as they enter adulthood.
3. Increase In Wealth
If you’ve recently been granted a big promotion (and a big raise to go with it) or inherited money that is now invested for growth—you guessed it—it’s time for a life insurance review. Maybe you’ve increased your real estate portfolio. Or perhaps your small business venture is finally taking off and providing your family with an income the likes of which they’ve never seen.
Whenever your wealth increases, you need to review your life insurance policy to ensure the benefits will cover this new lifestyle for your dependents if you pass away. The worst thing that could happen is for your spouse to be unable to make the mortgage payments, or lack the capability to run a family business that provides most of the income.
Adequate life insurance can prevent these misfortunes from ever becoming reality for your family.
4. Lifestyle Change
Lifestyle improvements may help you qualify for lower rates. If you’ve lost a lot of weight, are eating better, and are exercising regularly, you’re less likely to pass away from health complications like a heart attack or diabetes. These changes in lifestyle look favorable to a life insurance company, so it’s worth a review of your policy.
And if you were a smoker but you’ve finally quit for good, you should tell your life insurance company. Rates can be double or triple for smokers than what they are for non-smokers. (1) It’s certainly worth calling your life insurance company to find out how long you must have quit smoking to be considered a non-smoker and qualify for lower rates.
Need A Life Insurance Review? We Can Help
Whether you’ve experienced one of the life events described above or just need to do an annual review, consider partnering with a full-service financial firm like Grace Wealth Management Group, Inc. We practice comprehensive financial planning to make sure all parts of your financial life are working in tandem, including your life insurance policy. Schedule an appointment here, call me at (949) 631-3840 x2, or email jbang@cfiemail.com to set up a complimentary meeting.
About Jim Peters
Jim Peters is an independent financial advisor and the founder of Grace Wealth Management Group, Inc., a full-service financial firm committed to helping people pursue their financial goals. With more than 24 years of experience in the industry, Jim combines his extensive knowledge with his genuine interest in helping people pursue financial independence. Beyond his experience, he is certified as both a Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®), meaning he has advanced training and knowledge in financial planning and insurance. Based in Irvine, California, Jim specializes in working with individuals, families, and businesses throughout Orange County. To learn more, connect with Jim on LinkedIn or visit www.financialadvisorirvine.com.
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