Financial tools require maintenance from time to time to ensure that they’re working for you, not against you. Life insurance is no exception. It’s important to revisit your life insurance policy at least once a year and when special life events occur to help make sure you’ve got the best life insurance.
We’ve got everything you need to know below to help you navigate when to check in on life insurance.
1. The Default: Once a Year
As a standard rule of thumb, you may want to revisit your life insurance policy once a year. Setting this as your default can ensure that you’re updating your policy periodically with your life changes.
The annual review coincides with the general rule of thumb to check important financial markers like insurance and certain investment funds. If you can connect with your life insurance company at least once a year, a representative should be able to help you work through your coverage and any adjustments needed.
2. Additional Dependents
As your family expands, the need for additional coverage may be necessary. Consider contacting your insurance company to see what options you have, whether it be upgrading your plan to include a more significant benefit amount, adding beneficiaries, or purchasing an additional plan to bolster coverage.
The options available to you will depend on your insurer, policy type, and other factors, and may require going through the approval process again, so be sure to start the process as early as possible.
3. Divorce and Selling Homes
While divorce is not everyone’s favorite topic, it’s especially important to keep life insurance companies in the loop upon making that decision. If you fail to update the company, any benefit received will go to your ex-spouse rather than the current ones.
While this might be easy to remember when switching coverage over to a new spouse, it may be something you forget if you’re not quickly remarrying. The same revisiting is necessary if you sell a home during a divorce or otherwise. Because you have less to insure, you may be able to secure cheaper insurance premiums.
Retirement changes a lot of things. One of which may be your life insurance policy, especially when purchased through an employer. It’s important to check in with your insurer and employer to understand how the policy may change as you transition into retirement or if it’s active at all.
Knowing this information ahead of time can help you preemptively purchase a new plan to avoid gaps in coverage if necessary.
5. Positive Life Changes
If you’re getting married or purchasing a first home (or additional property), it’s time to revisit your life insurance policy. There is no sense in carrying a policy that no longer applies to your life circumstances as it excludes those you want to protect most. Instead of delaying changes to your life insurance policy, be sure to contact your provider as soon as possible to expand or switch coverage where necessary to assure minimal risk.
The Bottom Line
Life insurance is a great tool, but it’s most effective when it’s up-to-date to ensure you’re receiving the best coverage. In addition to checking in with your life insurer every year, be sure to reach out when any major life event takes place to see how your life insurance policy should be updated.