Life insurance is hard. It's hard to know if you have the right kind. It's hard to know if you have enough. And it's hard to know if you need any at all.
Insurance companies have made it even harder by coming up with bewildering names: whole life, term life, universal life. Some life insurance policies have a cash value while others do not. Some invest that cash value in the stock market while others pay a fixed rate of interest. Some insurance policies combine all of these ideas.
A recent study by life insurance advocacy group LIMRA discovered that most Americans thought a 20-year $250,000 level term life policy for a healthy 30-year-old costs about $400 a year. In reality, annual premiums for such a policy typically run about $150. No wonder, as LIMRA noted, that 83% of consumers forego buying life insurance. I see this misperception all the time. In addition, some people are paying for insurance that is not right for them.1 This is why it's important for you to sit down annually with an insurance professional to review how your policy works and how it will help you to protect your family.
Why review your life insurance?
When you're young, a certain type of policy is needed. As you raise a family and take on more responsibilities, your needs change again. At some point—when the nest is empty or other life changes occur—there may come a time where you don't need life insurance at all or you may desperately need it to protect your estate. Reviewing your life insurance policies is one way to make sure you have the coverage that is right for you and your family now, today—not when you bought it.
Did you know our financial services advisors can conduct an insurance review? After purchasing life (or other) insurance, it's important to periodically review all policies to make sure they align with current and future goals.
Our advisors view insurance as a tool to enhance an overall wealth plan and help achieve your dreams. Through our insurance review process, we analyze the fiscal health of current policies and look for ways to maximize policy coverage and premium savings. This objective and consultative approach puts your interest first and can help you to see the big picture.
An objective review of your policies will reveal crucial information:
- Your insurance needs may have changed.
- You may currently be paying for too much coverage. All policies sold since Jan. 1, 2008, utilize the new 2001 CSO Mortality Tables, which reflect longer life expectancies and have allowed insurance companies to reduce their cost of insurance charges.
- Your policy may be failing to perform as originally intended due to interest rate changes.
- A premium increase may be scheduled for your policy.
- The financial ratings of your insurer may have changed.
- New products may provide lifetime guaranteed coverage, which would protect you from outliving your coverage, no matter how long you live. Some older product designs were created to mature before age 100, which could potentially lead to unwanted tax liabilities at a vulnerable age, or even no coverage at all.
- Underwriting innovations or your health status may have improved, which can reduce the cost of alternative coverage.
- New features and riders may offer important new benefits. This can include return of premium or guaranteed death benefit protection, as well as the ability to access the death benefit for chronic illness or long-term care needs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.