All types of insurance are based on the premise of “better safe than sorry.” We all know it’s wise to put precautionary measures in place before calamity strikes. But shopping for insurance—particularly life insurance—is just about the last thing anyone wants to do with their time. It wouldn’t be so bad if it was just a one-and-done kind of deal; but as time passes and circumstances change, you will likely find that your life insurance coverage and add-ons need to change as well. And because life insurance is one of the most important components of your financial plan to protect your loved ones should you pass away, it’s critical to get it right.
There’s no way for you to know when your family will need your life insurance benefits, so it’s wise to conduct a life insurance review annually with your financial advisor to ensure appropriate coverage. However, significant life changes might require a more frequent policy review. Let’s discuss 4 reasons why you may be due for a life insurance review.
1. Change in Marital Status
When you experience a change in marital status, it’s time to review life insurance. Married people quickly learn to rely on each other’s income and build a lifestyle that can only be supported by their combined earnings. And if you’re the only spouse that works, it’s even more important to make sure your spouse is protected financially should the worst happen.
If you get divorced, review your beneficiary designations, especially if the divorce is less than amicable. Some families realize too late that beneficiaries weren’t updated, so an ex-spouse receives the entirety of the insurance benefits. Don’t let this happen to your family.
2. Birth of a Child
As your family grows, more people become dependent on your income. Children (God bless ’em) are a huge expense. You should review your life insurance policy anytime you welcome a new member to your family. With proper coverage, your surviving spouse will be able to comfortably support the family for a long period of time while figuring out next steps.
Additionally, you may want to make certain that your policy will cover your children’s educational needs. Enough life insurance to cover college tuition may offer the greatest peace of mind—and ensure your children are prepared to support themselves as they enter adulthood.
3. Increase in Wealth
If you’ve recently been granted a big promotion (and a big raise to go with it) or inherited money that is now invested for growth—you guessed it—it’s time for a life insurance review. Maybe you’ve increased your real estate portfolio. Or perhaps your small business venture is finally taking off and providing your family with an income the likes of which they’ve never seen.
Whenever your wealth increases, you need to review your life insurance policy to ensure the benefits will cover this new lifestyle for your dependents if you pass away. The worst thing that could happen is for your spouse to be unable to make the mortgage payments, or lack the capability to run a family business that provides most of the income.
Adequate life insurance can prevent these misfortunes from ever becoming reality for your family.
4. Lifestyle Change
Lifestyle improvements may help you qualify for lower rates. If you’ve lost a lot of weight, are eating better, and are exercising regularly, you’re less likely to pass away from health complications like a heart attack or diabetes. These changes in lifestyle look favorable to a life insurance company, so it’s worth a review of your policy.
And if you were a smoker but you’ve finally quit for good, you should tell your life insurance company. Rates can be double or triple for smokers than what they are for non-smokers. (1) It’s certainly worth calling your life insurance company to find out how long you must have quit smoking to be considered a non-smoker and qualify for lower rates.
Do You Need a Life Insurance Review? We Can Help.
If you’ve experienced one of the above-mentioned life events or you just need an annual review, consider partnering with a full-service financial firm like Security Financial Management. We practice comprehensive financial planning to make sure all pieces of your financial puzzle fit together, including your life insurance policy—keeping you safe rather than sorry! If you think our firm would be a good fit for your financial needs, schedule a call today or reach out to us at SFM@sfmadvisorgroup.com.
About Security Financial Management
Security Financial Management is an independent financial services firm dedicated to delivering exceptional service built on reliability and trust. With 3 locations in Central Florida and 1 in Rochester, MN, SFM has been partnering with clients for over 25 years, providing comprehensive financial planning. To learn more about Security Financial Management, connect with them on LinkedIn.
Advisory services offered through Investment Advisors, a division of ProEquities, Inc., a Registered Investment Advisor. Securities offered through ProEquities, Inc., a Registered Broker-Dealer, Member, FINRA & SIPC.
Security Financial Management is independent of ProEquities, Inc.