When should I review my life insurance policy?
A life insurance policy is one of the smartest investments you can make for your family and your future. But it isn’t something you can buy and then forget about for years. Life insurance policies should be reviewed periodically to ensure it's still meeting your needs — and that you aren’t paying for more than you need.
Policyholders often ask, “How often should I review my life insurance policy?” The Insurance Information Institute recommends an insurance policy review at least once a year. But if you experience any of these life-changing events, contact your insurance agent or representative to update your policy.
1. You got married or divorced.
Applying for a marriage license or signing a divorce decree doesn’t automatically change your life insurance beneficiary designations.
- If you get married, add your new partner as a named beneficiary on your life insurance policy.
- If you divorce or separate from your spouse or partner, review your policy to make sure the beneficiary designations reflect your wishes.
2. You’re planning retirement.
Retirement affects finances on many levels. Before you retire, review your policy and coverage amounts. Your children may not rely on your income, but what about your spouse or life partner? Think about the financial protection they’ll need if you pass away.
Related: Age in place while better planning your tax strategy
3. You or your spouse or partner experience significant health changes.
If your health declines and you already have life insurance, you shouldn’t see a change in your rates. Be certain to review your life insurance policy, so you know when your coverage expires. Permanent life insurance lasts your entire lifetime, but term coverage has an end date.
4. You’ve added debt.
Changes in your finances, like home equity loans, car payments, or credit consolidation loans, can make a big difference when your loved ones are on a fixed income. Update your life insurance coverage to reflect the new obligations placed on your family members if something were to happen to you today.
5. You refinance your home.
You don’t want your loved ones to worry about losing their home when you pass away. Life insurance death benefits can be used to pay mortgage expenses. If you refinance your mortgage, make sure your coverage is adequate so your family can remain in the home.
Related: Streamline income from home equity into your wallet
6. Your kids move out on their own.
Part of the reason you purchased life insurance coverage was to provide financially for your children. You may not need as much coverage once they move out on their own and can support themselves. Check with your insurance agent about reducing your coverage. It could lower your premiums and save you money
7. You come into an inheritance.
If you receive an inheritance, you may no longer need life insurance. Here’s why: Life insurance provides a payout for loved ones to cover living expenses, debts, funeral costs, and other expenses when you die. Depending on the size of your inheritance, it may provide enough support for your family. In that case, talk to your life insurance agent about evaluating your need for coverage.
Reviewing your policy at regular intervals is important. It can help ensure you maintain adequate coverage and that beneficiaries are up to date. So don’t put it off for too long. Look over your life insurance to protect your family’s future.
