Some types of shopping can be fun: holiday gifts, clothes, maybe a new car. But I’m not sure anyone has ever considered shopping for life insurance (or any kind of insurance) fun. It wouldn’t be so bad if it was just a one-and-done kind of deal. But as your circumstances change, you will likely find that your life insurance coverage and add-ons need to change as well. After all, life insurance is one of the most important components of your financial plan to make sure your loved ones are protected if you pass away.
You don’t 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. But sometimes significant life changes will mean you need to review your policy more often. Let’s discuss 4 other 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.
Have you experienced one of the above-mentioned life events? Do you just need an annual review? Consider partnering with a full-service financial firm like Whittenburg Wealth Partners. We practice comprehensive financial planning to make sure all pieces of your financial puzzle fit together, including your life insurance policy. If you think our firm would be a good fit for your financial needs, easily schedule a no-fee, no-obligation virtual appointment or contact us at 801-839-7050 or firstname.lastname@example.org.
Austyn Whittenburg is a wealth planner and partner at Whittenburg Wealth Partners, a family-owned and family-operated financial and wealth management firm located in Salt Lake City, Utah. Austyn has 7 years of experience as a wealth planner and spends his days helping business owners, emerging successful families, and their ensuing generations simplify their financial lives and discover meaningful solutions. Austyn received a Bachelor of Science in Finance from Brigham Young University and holds the Certified Financial Planner™ (CFP®) and Certified Business Exit Consultant (CBEC®) credentials, his FINRA Series 7 through LPL Financial and 66 registrations through LPL Financial and Stratos Wealth Partners, and his life, health, disability, and annuity insurance licenses. Austyn is active in his community of Herriman, Utah, where he resides with his wife, Ciera, and two young sons, Grayson and Graham.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.