How Often Should You Review Your Life Insurance?
Updated July 3, 2021 . AmFam Team
When you think about why buying life insurance is important, you probably think of financially protecting your family and loved ones in your life when you pass away. With life insurance in place, you can help ensure financial support for those that matter most. But have you spent time reviewing your life policy and ensuring it still meets your needs since purchasing it?
We recommend reviewing your life insurance every year. Having the right coverage in place means less for you — and those you care for — to worry about. Because so much can happen in 12 short months, it's important to make sure your policy is right for you and your family today.
To get you started, we’ve put together a list of 9 key reasons why you should review your life insurance policies every year.
9 Reasons to Review Your Life Insurance Policies Annually
Reviewing your life insurance every year helps make sure your policies are up to date and that additional coverage is added if needed. If you do choose to add additional coverage, in most cases you’ll need to apply for — and then purchase — a new policy. Because term and whole life insurance premiums typically increase as you age, the new rate may be higher for the additional policy.
Use the opportunity to adjust coverage to your needs or make changes to any details on file. This brings us to the number one reason you should annually review your life insurance policy:
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To review or change your beneficiaries
- Your family has grown
- You started a new job
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You’re starting a new business
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You’ve added debt
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Conditions have changed for your parents
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New marital status
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Your kids are out on their own
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You recently bought a home
Your beneficiaries are the people or entities you’ve selected to receive your life insurance death benefit.
Your annual life insurance policy review should always include a beneficiary checkup. Take this opportunity to add, remove or change your designations due to any big life events (e.g. marriage, divorce, death of named beneficiary) that occurred over the past year or any changes in how you wish the proceeds from the life insurance death benefit to be distributed. Doing so will help make the claims process easier when your loved ones need it most.
As you welcome new members to the family, it's important to update your life insurance. From final expenses to loss of income, your coverage should always meet your growing needs.
You may also want to consider a DreamSecure Children’s Whole Life Insurance policy. With it, there is the opportunity to purchase more coverage as your children grown.*
In the pursuit of your dreams, landing a job you've been hoping for is a big step. The right opportunity can open many doors and bring you closer to bigger goals.
After a promotion, or when you start a new job, check in with your agent to make sure your policy still meets your needs. It's important to account for extra income.
Whether you’ve opened a new online store or launched a brick-and-mortar commercial venture, your big investments probably came with a big loan or may be the result of a large personal contribution.
If you had previously earmarked the savings you’ve since invested for an inheritance, an additional life policy may be necessary to make up the difference and help ensure your loved ones are provided for if you were to pass away. And if you took out a loan that your loved ones could be responsible for, you’ll want to know that you have enough life insurance to cover this new obligation.
Did you take on any loans over the past year? Things like home equity loans, or credit consolidation loans to lower interest payments? Those small shifts in your finances could possibly make a big difference when your loved ones are on a fixed income.
It’s always a good idea to have an updated monthly budget when you review your life insurance. Having a full scope of your finances can help provide needed relief to your beneficiaries.
Things may have changed for your parents, resulting in a move to an assisted living facility or moving into your home. This could mean taking on a greater monthly financial load.
If this is true for your family, it's important to consider adding coverage for increased costs. You may also want to consider final expense coverage for your elderly parents at the time of your review.
Few changes in your life will be bigger than a shift in your marital status. For the recently engaged or married, you’ll most likely want to be sure your partner is named as a beneficiary on your life policy.
This also applies to divorced or separated couples. Take the time to make sure your beneficiaries are up to date and reflect your wishes. When this step is overlooked, previously named beneficiaries could be legally entitled to funds you may want others to now receive.
As kids grow up, they move on. Often, though, they still need your financial support; especially for students starting college. Help keep their future secure by verifying your policy details. If your children are more financially independent, you may consider allocating benefits elsewhere.
If you’ve recently closed on the purchase of a new home, that’s a change worth reviewing with your insurance agent. With a new mortgage in play, you’ll likely want your family to continue living there after your passing. Make sure your policy has the coverage amount and duration needed for your beneficiaries.
Bundle and Save on Your Insurance
Need one more great reason to review your life insurance? You may be able to score a discount!
If you have auto or homeowners insurance with American Family Insurance, and you buy a life insurance policy from American Family Life Insurance Company, you may be able to get a discount on your auto and home premiums.** Be sure to check in with your agent and verify your discounts are up to date.
How to Review Your Life Insurance Policy
Here’s a quick checklist of some of the things you should be looking for when you review your life insurance policy:
- Type of policy. What type of insurance policy are you reviewing? This sounds like a no-brainer, but there are so many different types of insurance, it’s easy to get confused. Make the type of policy you’re updating the name of the file.
- Insurance carrier. Who is your insurance provider? The name of the company, along with the customer service number and the name of your agent, should be easy to find on page one. If you have a business card from your agent, consider including this in your file, too. Also, don’t forget to have the policy number in your file!
- Beneficiaries. Who are the current beneficiaries and do you need to change them? For example, an ex-spouse listed on your policy might need to be removed.
- Coverage amount How much coverage do you have? Is this amount still enough to cover your life insurance needs?
Review Your Life Insurance Coverage Today
As life unfolds, circumstances may change. Because of that, so should your insurance. Be sure you're selecting coverage from a company with the flexibility to meet your needs.
Reach out to an American Family Insurance agent (Opens in a new tab)today to make sure your policy does exactly that. In addition to well-crafted life insurance, you’ll also have the peace of mind that comes with the knowledge that your loved ones are covered when they’ll need that coverage most.
*Available only at specified dates and life events and is subject to benefit amount limitations. See policy for additional details.
**Discounts may vary by state and company underwriting the auto or homeowners policy. Discounts may not apply to all coverages on an auto or homeowners policy. Discounts do not apply to the life policy.
Policy Forms: ICC17-223 WL, L-223 (ND) WL, L-223 WL, ICC17-224 WL, L-224 (ND) WL, L-224 WL
Related Articles
- Life Insurance for Children
You understand the importance of providing a secure financial future for your loved ones, and purchasing a life insurance policy on a child (with the ability to transfer ownership of the policy in the future when the child becomes an adult) can help you do just that. Let’s take a look at how a life insurance policy can help you proactively protect your loved one’s financial future.
Why Is Children’s Life Insurance a Good Purchase?
A life insurance policy is a purchase that can last a lifetime. Whether you purchase it on your child or grandchild, there are a number of benefits.
Low premiums
Since the cost of life insurance depends largely on things like age and health, purchasing a life policy when they’re young can lock in a low premium for the entire policy payment term.
Protect their ability to secure life insurance in the future
One of the biggest benefits of buying life insurance on a child is protecting their ability to secure life insurance in the future. When purchasing a permanent life policy on a child, your policy might include (if not, you might have the option to add) a Guaranteed Purchase Option (GPO) benefit to ensure the opportunity to purchase additional life insurance on them at certain ages and life events down the road without a medical examination or proof of health.
Build cash value
A permanent life insurance policy has the ability to accumulate cash value year after year. The earlier you start, the longer cash value can build, so when you purchase a life insurance policy for children when they’re young, the cash value has a lot of time to grow before they may need to use it. And, if ownership has been transferred to the adult child, they can even borrow against their cash value* if needed.
Should I Purchase Permanent Children's Life Insurance?
If you’re purchasing life insurance on a child, most people select permanent life insurance since it is built to last the child’s entire life. A permanent life insurance policy provides not only a death benefit, but, as mentioned before, the policy also has living benefits, like the ability to accumulate cash value.
Purchasing life insurance can be a practical and simple way to help protect your loved ones’ dreams. Check out American Family Life Insurance Company’s DreamSecure Children’s Whole Life permanent life insurance policy to learn more. Or you can also check in with an agent — they’ll be able to answer any questions you may have about children’s life insurance options through American Family Life Insurance Company.
This is a brief description of coverage and is subject to policy and/or rider terms and conditions which may vary by state. Fixed and guaranteed premiums are statements about the policy as determined at issue, and any changes made to a policy may affect the premium and are subject to our underwriting rules. The words lifetime, lifelong and permanent are subject to policy terms and conditions. DreamSecure Whole Life Insurance policies mature at age 121. Please check with an American Family agent for details on coverages and restrictions.
*Any loans taken from your life insurance policy will accrue interest. An outstanding loan balance (loan plus interest) will be deducted from the death benefit at the time of claim or from the cash value if surrendered. If the loan balance grows too large for the cash value to support it, the policy could terminate.
Policy Forms: ICC17-223 WL, Policy Form L-223 (ND) WL, Policy Form L-223 WL, Policy Form ICC17-224 WL, Policy Form L-224 (ND) WL, Policy Form L-224 WL
- The Difference Between Annuities and Life Insurance
What’s the difference between life insurance and annuities? It’s a common question. If you wonder what it takes to secure a financial future for yourself and those you love, it may be one you find yourself asking. And that’s a very good thing.
The bottom line: life insurance can help provide your loved ones with the financial peace of mind they deserve if you were to pass away. Annuities provide a tax-deferred way to grow money and provide an income stream. Both should be considered as part of a long-term financial plan.
Although both share some similarities, the overall purpose of each is very different. Let’s take a quick look.
Life Insurance Helps Protect Their Financial Future
When comparing life insurance and annuities, the biggest difference is that life insurance is designed to help protect against a financial loss for others after your death. Annuities on the other hand help protect you financially while you’re still alive.
Life Insurance helps to financially secure your loved ones’ future, since the death benefit can help with things like replacing your income and meeting important financial needs such as:
- Funeral costs
- Daily living expenses
- Mortgage payments
- College funding
When you purchase life insurance, you aren’t purchasing it for you — it’s really a purchase for the people you want to take care of.
If you want to find the right life insurance for you and your loved ones, American Family Life Insurance Company has the customized options you're looking for. If you want to learn even more life insurance, read up on the specifics of how life insurance works.
Annuities Help Prepare You for the Future
Think of an annuity as a tool that could help meet your retirement needs. The primary purpose of annuities is to create income for you, and this can be done in a few different ways. You can set up payments that last for your entire life, a specific period of time or a combination of both.
There are many potential benefits of annuities. Some include:
- The ability to grow account value on a tax-deferred basis
- The potential for a future income stream that can’t be outlived
- The possibility of a lump sum benefit that can be paid to a surviving spouse
How do annuities work?
You can buy an annuity by giving your insurance company either a single lump sum or making payments over time. The insurance company then invests your money — referred to as a premium or purchase payment — in different ways depending on the type of annuity you select.
You can buy an annuity that begins making payments back to you right away — this is called an immediate annuity — or if you prefer, annuities are available that delay making payments to you for an extended period, sometimes many years.
Start Planning for the Future Today
Life insurance and annuities work in tandem to protect a future for yourself and those you care for. Now that you have a high-level overview, discuss with your agent how these options fit your needs.
Annuities are long-term insurance contracts intended for retirement planning. Annuities are issued by Protective Life Insurance Company located in Nashville, TN, with administrative offices at 2801 Highway 280 South, Birmingham, AL 35223, through a relationship with American Family Brokerage, Inc., 6000 American Parkway, Madison, WI 53783.
- How Cash Value Life Insurance Works
You most likely purchased life insurance for the financial protection it provides your loved ones in the event of your death — but there can be some additional benefits to life insurance. Some life insurance policies, such as DreamSecure Whole Life Insurance offers the opportunity to build “cash value,” otherwise known as a living benefit.
That living benefit is the value in your policy that may be borrowed against or paid out if the policy is surrendered before death.* Let’s take a closer look at how cash value in life insurance works.
- Paying For Life Insurance
Having life insurance may be part of your long-term financial planning, and if you already have coverage to help secure your loved ones’ future, good for you! Sometimes, it can be difficult to understand the ins and outs of your life insurance policy — but we’re here to clear up any confusion.
Let’s take a closer look at the types of life policies available, and how paying for life insurance works for each.
