Life insurance is one of those things we tend to ignore or put off for another time. We may think about it when we initially buy a policy, but never consider whether there is a need to update our coverage. But as your life changes, your needs will also likely change. That’s why it’s important to review your policy on an annual basis. Doing so will ensure that you have the right coverage for you and your family’s changing needs.
Determining Your Life Insurance Needs
The first factor to think about is whether term life or whole life insurance is more appropriate. Term policies last only a certain number of years. They generally provide only death benefits, and they will most likely be less expensive as there is no cash value and they only provide a death benefit. Whole life policies, on the other hand, accumulate value over time and provide the same death benefits. These policies are more expensive than term policies, but they can be better in the long run.
Do Life Changes Mean Policy Changes?
If you’ve changed jobs, had a child, or even if your retirement plans have changed, it’s time to look at your life insurance needs. A growing family or changing economic environment might mean that you need more from your policy.
Meanwhile, it’s also important to remember that your premiums are based on a variety of factors, such as health and age. If something changes—you give up smoking, for instance—you could be eligible for a lower premium.
Ultimately a life insurance policy is no different from any other type of policy; just as you’d review your auto insurance or homeowner’s policy on a regular basis, sit down with your insurance agent on a regular basis to review your life insurance needs.