Insurance manages your risk and is the defensive component to financial planning. Consumers should have an annual review of all their insurance polices to maintain their relevance. Surprisingly, life insurance is the most neglected insurance when it comes to an annual review, but the most important in defensive planning.
Life insurance can be purchased for temporary or permanent coverage, as the need dictates. It’s sold to cover the unlikely event of the death of the breadwinners of a family, business partners in a firm, or grantor of gifts to charities. Life insurance proceeds can pay off debt, fund future obligations and create legacies for family, friends or favorite non-profits. In business scenarios it can buy out a business partner’s spouse or fund a buy out for new owners. But the common thread in all these circumstances of life is that things happen. Life changes. It doesn’t stay static. And neither can your policy remain the same when life events occur.
You may need to add or subtract coverage. You may have temporary needs that evolve into permanent needs. The policies themselves may be antiquated; both in the cost of insurance and the earnings generated on the cash value accounts. Health conditions have radically changed in the art of underwriting. Health conditions that once were classified as declines, postpones, or highly rated may be viewed more liberally based on lower death claims and medical advances. And the impact of longevity can’t be underscored enough as we continue to live longer, resulting in lower premiums.
It is estimated that 65% of the life insurance in force is underperforming, priced incorrectly or inappropriate to the clients needs. It’s worth your while to review your life insurance policies with independent agents who represent the top 50 insurance companies, and have your financial interests in mind.