By Scott Bishop and Tom Mountain
Out of sight, out of mind. That’s how most of us approach life insurance. You bought your policy and did your job of protecting your family, so you’re good, right? Maybe; but maybe not. Life insurance is not supposed to be a set-it-and-forget-it financial product. It’s great that you have a policy, but if you don’t check in every once in a while, how can you know it’s working for you?
Best practice suggests reviewing your life insurance policy every year. Whether that’s a quick review of your financial situation and family circumstances or an in-depth analysis of your policy and its benefits, here’s what you want to consider during a life insurance review.
1. Has Life Changed?
When you originally chose your policy amount, you most likely took into consideration your mortgage, other debt, future college costs, and your family’s living expenses. If any of these things change, your life insurance coverage may need to change as well.
For example, if you added another child to your family, you might want to increase coverage. If you got a new mortgage or added any other debt, your liabilities will increase and your policy should reflect that. Or maybe you’ve put your kids through college, have steadily growing savings, and have paid off the mortgage. Do you need as much coverage as you did when you had young children around and less money to spare? Any time you reach a new life milestone or experience a major change, review your coverage and update your beneficiaries.
2. Is Your Policy Obsolete?
Just like technology, insurance policies can become outdated as well. Throughout the last few decades, life insurance has evolved into a more valuable and robust risk management tool. Today’s policies can cover more than just premature death. There are options to cover chronic illness and long-term care, and they can direct policy cash values among multiple options—not just the insurer’s general account.
If it’s been a few years or even decades since you first purchased your policy, you may need to add additional coverage, such as long-term care, with a rider, which can be more cost-effective than buying a separate policy.
3. Is Your Policy Up To Par?
If you have a whole life policy with cash benefits, how do you know if your life insurance policy is performing as expected? When you purchased the policy, you were most likely provided a projection of values, but have you seen an updated estimate since then? How would it compare to what you were originally shown?
Your policy may be outperforming its original projection, but there’s also the risk that the policy has underperformed. If so, what might that mean for you and your plans for your loved ones?
Now may be a good time to update your projections and ensure they are on track. Usually, it’s fairly simple to adjust a policy before it goes too far off course. Your advisor can help you evaluate how the policy has performed since you purchased it and how it is projected to perform in the future.
Time For A Review!
You already have enough on your plate without adding another financial task to the mix. But your family’s financial future shouldn’t be gambled with. If you aren’t sure if your policy is right for you or if you’ve been through life changes that warrant a second look, our team at Mountain-Bishop Private Wealth Management can help you examine your policies in depth. Reach out to us at 562-432-3783 or [email protected] to schedule a free introductory meeting.
About Us
Mountain-Bishop Private Wealth Management is a full-service independent financial services and investment services firm that has been providing retirement and investment guidance to high-net-worth individuals, business owners, and Boeing employees for more than 25 years. Through our long-term guidance, we strive to help our clients build, protect, distribute, and transfer their wealth, tailoring our services and strategies to address each client’s unique needs so they can bridge the gap between their current financial situation and their long-term goals.
Scott and Tom built their practice on trust and excellence. They focus individually on each client, delivering the personalized touch that is missing with many other firms.
The Financial Consultants of Mountain-Bishop Private Wealth Management are registered representatives with, and securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.
The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: (AK, AZ, CA, CO, FL, GA, ID, IL, MI, MO, NC, NJ, NM, NV, OR, PA, SC, UT, VA, WA) SCOTT E. BISHOP CA LICENSE OB55872 THOMAS P. MOUNTAIN CA LICENSE OB55827