Your life insurance policy might be comprehensive, but life often throws us curveballs. Sometimes, a policy’s limits and qualifying coverage aspects change. This is unlikely, however, and your policy provider will notify you if there are any mid-contract changes, such as a premium change.
More often than policy changes, however, are changes in a policyholder’s coverage needs. New debts, unexpected disabilities and even divorce can change your entire experience with life insurance. Fortunately, there’s a way to make sure your life insurance policy reflects your lifestyle needs: an insurance policy review.
When Should I Review My Life Insurance Policy?
According to the National Association of Insurance Commissioners, you should review your life insurance policy often. Sometimes, your older coverage might not be appropriate for your current situation.
Many financial advisors suggest that you review your life insurance policy every year, for that matter. It’s easy to overlook potential policy cost changes in the wake of drastic lifestyle changes. It’s also incredibly easy to overlook the factors which necessitate policy changes, in the first place. That’s why you should make it a part of your annual calendar to review your policy.
What Affects My Life Insurance Needs?
What are these lifestyle changes, anyway? You should sit down with your insurance agent before the review to get some in-depth insight into your situation. They can help you examine how your living situation might’ve changed your policy costs.
In general, the following factors will affect your life insurance needs:
If you’ve been in an accident, have fallen ill or are otherwise disabled, you might not be able to pay your insurance premium. When disability occurs, this premium is still a financial responsibility. Your annual review is the best time to ask your agent about policy riders. A waiver of premium rider will often help you pay for your life insurance premiums if you can’t work due to disability.
- Financial Responsibility Changes
Financial need changes are another great topic to discuss during a life insurance policy review. Sometimes, expenses like the following can change one’s ability to cover annual insurance costs:
- Family health care costs
- Educational expenses
Today, one out of three households state that they’d have difficulty handling day-to-day living expenses if their primary wage earner were to pass away. An increase in financial responsibilities might mean you should increase your life insurance coverage.
If you’ve financed a new vehicle, have taken out a mortgage or have borrowed significant capital—you have new debt needs. An annual policy review is a great opportunity to discuss these debts. In doing so, you can alter your coverage to make the financial ends meet. Therefore, your survivors won’t have to worry about this debt upon your death.
Your life insurance policy is important, but your coverage needs may have changed. Get in touch with your insurance agent today, because a single policy review can make all the difference.
Also Read: How to Buy Life Insurance at 40