Retirement Highlights
By Joel Zimmerman

Top 8 Situations Where You Should Review Your Life Insurance Policy

Typically, a life insurance policy is presented as a product that reduces your worries, by keeping your financial security foremost. That’s generally the case, but in some circumstances you need to reexamine your coverage, and make relevant changes as per your evolving needs.

Your life insurance policy should definitely be re-evaluated in certain situations, like the ones listed below:

1> Your Plan Seems Complex

You may have invested in a life insurance policy without understanding the various charges and benefits, and how they apply to your financial needs. If it seems complex and you feel you haven’t been thoroughly briefed on how it works, it might be time to change the policy all together.

At the very least, get an insurance agent to explain the intricacies of your current plan so you can decide if it’s worth keeping.

2> Accumulated Debt

Here is an unfavorable scenario: you invest in life insurance, followed by a mortgage or student loan after a couple of years. In case of your demise, these debts will pass on to family members, and your current insurance may not provide enough coverage.

Any time you take up significant debt, review your insurance policy and consult with insurance agents about the option of increasing the coverage.

3> Deteriorating Health

Deteriorating health makes you realize you aren’t going to live forever, but it also poses challenges when insurance providers learn of it. As early as possible, see what else lies ahead in terms of reviewing and improving policies.

It’s hard to get a new insurance policy with long-term illnesses or health issues, but there are options available. For instance, you might be able to convert term life insurance to permanent coverage for life.

4> Change in Dependents

When there’s an addition (e.g. you get married or have a baby) or a reduction (for instance, a child becoming financially independent or a family member’s demise) in your dependents, compare and contrast different insurance plans available. Investing in a new plan might be cheaper than increasing your current coverage!

Ideally, the death benefits should cover children’s financial needs up to their college years, as well as provide for your spouse and other family members who depend on you (like aged parents, nephews and nieces, grandchildren, etc.).

5> Dependents are Unable to Work

Potential disability is a factor that people consider while buying life insurance policies, but usually only their own. Even if you had not considered it during the initial sign up, you may need to review your insurance policy in case a dependent becomes disabled.

If they cannot provide for themselves, it’s advisable to extend the life of the policy or invest in permanent insurance to protect them financially in case of your death.

6> The Insurance Company Hits a Rough Patch

If your insurance carrier starts getting bad press or you hear rumors of instability, a simple online search will give you an update on their financial situation and market rating. If that’s falling, it might be time to cut loose.

Consult an independent insurance agent to understand whether it’s just a bad patch or if there’s a chance that the company may not be able to honor your policy, before deciding whether to continue or switch.

7> You’re Close to Retirement

If your employer offers group life insurance and you’ve gotten used to relying on that, you may need to invest in a personal plan before you retire from work. Group policies typically cannot be converted to individual plans, and when they can, the rates go up tremendously.

It’s best to secure your own future while you’re still employed, by reviewing your employer-provided coverage or existing personal plans and making changes that will ensure a cost-effective solution.

8> You Want More Retirement Income

When retirement plans come into play you need to incorporate them with your insurance. Insurance proceeds can sustain you and your dependents, but careful planning will be required if you want to increase your retirement income.

For instance, you can use life insurance as an alternative to reduced fixed benefits from your pension plan (when you want to include your spouse). Instead of the spousal pension benefit, you can protect their financial security with the insurance.

It’s best to discuss your options with an independent insurance advisor like LifeCentra, to ensure you’re getting authoritative and bias-free advice. We’d love to help you meet your life goals and retirement plans, so get in touch for a complimentary review of your existing coverage today!

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