If you own life insurance, there’s a good chance that you’ve filed your policy and haven’t given it much thought in a few years. However, many policies require maintenance, which is why we recommend an annual check up. Here are the important questions to ask:
Has your premium increased?
Increasing premiums can be a sign that your policy is not performing as expected. It’s important to determine the reason for the increase and decide if you can afford to pay more than planned. You should compare your policy to a new one, especially if you didn’t comparison shop when you initially bought it.
Does your policy have cash value?
(It likely does if you have a Whole, Variable or Indexed policy.)
If you are building cash value within a policy, it’s important to see if the policy performance meets your expectations. What is the purpose of the cash value? Are you planning to withdraw it? Would you prefer to have lower premiums or more life insurance? Many people don’t realize that at death, only the death benefit is paid out – the cash value is NOT. Building up large amounts of cash value that you have no intention to use during your lifetime is a waste.
Who is the Owner?
The owner might be you, or it might be the trustee of your insurance trust, or another person that you selected. The owner has a fiduciary responsibility to oversee the policy and is also the only party who can make changes to the policy. So if you made your brother-in-law your trustee years ago before you stopped getting along, it might be time to change the owner.
Who is the Beneficiary?
Your beneficiary might be your spouse, children, business partner or a trust…or your former spouse or ex-business partner! It’s important to review the beneficiaries, lest you accidentally leave a benefit to an unintended party.
Does anyone know about your policy and where to find it?
Make sure the beneficiaries and your advisors (CPA, attorney, financial advisor) can locate your policy.
Is your policy still relevant?
Perhaps you bought a 30 year term policy when you took out a mortgage, but you paid the mortgage off early. Or maybe you purchased a policy for estate planning, but the policy will lapse before age 100. Evaluate why you bought your policy and whether the policy is still providing necessary coverage.
Should you convert your term insurance?
Most term policies have a conversion option that lets you convert to a permanent insurance policy at the same health rate you initially received. If your health has declined and you need permanent insurance, a conversion is a good solution. However, the premium will be based on your age at the time of conversion, so the sooner you convert, the lower the premium will be.
Have you reviewed an Inforce Illustration with your insurance or financial advisor?
We recommend that for cash value policies, an inforce illustration is requested every one to two years and reviewed by your advisor.
So, how did you do?
If you need help better understanding your policy, please contact me for a complimentary review. I can be reached at 646-801-9983 or firstname.lastname@example.org