Is it time to review your life insurance policy?

There are some things you know you need to handle annually, like visiting your doctor, getting your car inspected, and going over your apartment lease. But another important annual checkup is reviewing your life insurance.

Just as you’d check in on other investments periodically, it’s important to review your life insurance policy. While your policy may have made sense for you and your loved ones when you purchased it—your needs may have changed over time. There are a few life events that could impact your coverage needs. Here are a few.

• Additional debt: Since life insurance is commonly used to pay off debt, if you—assuming you are the insured person—pass away, taking on more debt may prompt a need for more coverage. Similarly, if you’ve recently paid off a mortgage or otherwise reduced your household debt, you might need less insurance.
• Family changes: Getting married, having a baby, getting divorced, or losing a loved one can all be reasons to re-evaluate your life insurance policy.
• Income fluctuations: Changes in income are a reason to review your coverage. For example, if your income increases, the amount of money your family needs to maintain their standard of living could also go up. Similarly, if your income and lifestyle declines, you may find yourself paying for too much coverage.
• Health-related events: Any changes to your health status might change the insurance options available to you. For example, if you are the insured and your health has improved, you may consider running new quotes for potentially better rates.

A lot can happen over the course of a year, so an annual review is a good rule of thumb for assessing your life insurance policy, especially if you experienced any of the above events. While factors that prompt the need for additional coverage or policy changes typically do not occur on a regular basis, getting into the habit of checking your policy every year is still a savvy move. Not only does it provide you a regular opportunity to make sure your coverage still fits your needs, but also it gives you the chance to check other aspects of your policy to make sure they are up to date.

For instance, even if you are comfortable with your policy’s coverage, it's always a good idea to make sure your beneficiary designations align with your wishes.

There are several aspects of your policy that you should look at during your annual review:

• Type of policy: Determine if the type of policy you have—whether it’s term or permanent—fits your current needs.
• Employer benefit: If you have employer sponsored life insurance, which ends when your employment ends, determine whether an additional private policy would make sense. If you’ve lost your job or know you’re leaving or changing jobs, you may want to look into additional insurance.
• Death benefit: Look over the coverage amount you originally purchased. Do you have the right benefit amount for your family's current needs?
• Insurance carrier: Review your insurance carrier and keep track of the contact information. Having this information easily available can be helpful for your family.
• Date issued: If you have term life insurance, set a reminder to review your policy before its end date.
• Beneficiaries: Make sure your designated beneficiaries continue to align with your intentions for the death benefit.

Purchasing an appropriate policy is only the first step. Consider assessing your life insurance on an annual basis to make sure it aligns with your needs and your beneficiary designations are up to date.