How to Determine if Your Life Insurance Fits Your Needs
You may have purchased life insurance years ago and never looked back. However, you should check in on your life insurance regularly to be sure your coverage is sufficient.
Life insurance is an important aspect of any financial plan, but oftentimes people view it as a task that doesn’t require any additional attention after they initially purchase it. This couldn’t be farther from the truth. In fact, you should be regularly checking in on your life insurance to make sure it fits your current needs, which inevitably change over time.
Is My Life Insurance on Track?
Life insurance is a foundational aspect of your financial plan, but it's also a component that requires regular evaluations and, if necessary, adjustments. Ask yourself these questions to make sure you have the right kind and amount of life insurance.
- Do I have the right type of coverage? There are two types of life insurance: term and permanent. Understand what kind you have, and the advantages and uses of each.
- Am I paying a fair price? Because of increased lifespans, you could be paying less for your current coverage or obtain more coverage for the same premium you're already paying.
- Do I have enough coverage? Life events, such as a new marriage, the birth of a child or starting a business, can affect how much coverage you need.
- Is my policy at risk of lapsing? Some older policies are self-sustaining, meaning the policy pays the premiums. If the policy can't sustain itself, the premiums could increase or the policy could be eliminated altogether.
- Does my life insurance support my objectives? Life insurance has many purposes, but your original intentions when purchasing a policy may have changed.
Rich Ramassini says to make time to regularly check in on your life insurance to make sure it adequately reflects your needs and lifestyle.
Life insurance can play an integral role in retirement planning, business planning and estate planning.
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