Financial Spring Cleaning: Life Insurance Review
It’s easy for the many aspects of your personal finances to fall on the boring, neverending to do list. As spring approaches and you start preparing your home for the warmer months, it’s the perfect time to actually mark some items off that list and get your insurance, money, accounts and yes, even life plans, in order.
Life insurance is a tough topic. It can leave you feeling vulnerable and it’s not exactly dinner conversation material. We understand. But the sooner you get your documents in order, the sooner you can move on to more important matters – like family vacation!
Here are the questions you need to ask to ensure your life insurance policy is in order.
Where are your policies? Of course it’s important to have a physical copy of your life insurance policy and to ensure your beneficiary or personal representative knows where the document is, but it’s equally as important to confirm that your life insurance policies are still active. Something as simple as missing your bill in the mail or a change in your automatic draft setup could cause your policy to be inactive without you even realizing it. Make contact with your life insurance policy providers to make sure everything is up to date.
What type of policies do you have? Most people have life insurance policies through their employer, and while those policies are of value, they typically don’t offer nearly enough coverage if your family should ever need it. Workplace life insurance policies regularly offer one and a half to two times your yearly salary as a payout in the event of your passing. However, your family will need roughly five times your yearly salary to ensure they have enough income to meet immediate needs and to plan for any needed changes for the future.
Who are the beneficiaries of your policies? Even if your policy is valid, you’ll want to double check that your beneficiary is current. This information could change with a marriage, divorce, birth of a child or loss of a loved one. Take the time to scroll through your policy and ensure the person who is slated to receive the policy benefit is who you desire.
What is the death benefit of your policies? The death benefit is the amount of money your aforementioned beneficiary will receive if you die. The money is designed to make up for your loss of income – the exact reason you have a life insurance policy. The amount you need may change if you get a raise, have a child, get married, buy a house, or a number of other life events.
Do you need to change anything? Now that you’ve reviewed your policy and ensured the beneficiary and policy amount are accurate, consider what other changes need to be made. Details from your personal information to an improvement in health may need to be documented.
Reviewing your life insurance policy is a lot like spring cleaning – all the work is saved for one time of the year but you get to enjoy the benefits for months to come. Your family’s financial independence depends on your life insurance coverage, so make the time to make it a priority.
