Most people buy life insurance and then never think about it again. Unfortunately, that can be a huge mistake. Just like your investment accounts and retirement plans, it is important to review your life insurance. Some policies can be impacted by interest rates or stock market performance, some policies have benefits that can be triggered during your lifetime, or your goals and objectives may have changed.
Interest rates or stock market performance can have a huge impact your life insurance policy. Many insurance policies are built on cash value performance. The policies are projected to a certain age based on assumed rates of return. Assuming several factors such as paying the scheduled premiums and the assumed rate of return, the policies were projected to stay in force until maturity. Since interest rates have come down and we have seen a lot of stock market volatility, the policy’s cash value did not grow as projected and therefore the policy could lapse prior to maturity.
Although your agents probably discussed this with you, it is now time for a review. If your policy may expire before maturity, there are several things you can do. You can decrease the death benefit, increase premiums, or you may be able to use your current cash value to purchase a new life policy. This can provide you the leverage to get more death benefit, lower premiums, a longer duration or a combination of these benefits. It is important you speak with the right person to analyze what you have and provide the best options based on your current and future needs.
Have your needs changed? Have you purchased a new home, has your income changed, has your family grown? Did you buy your policy to cover a mortgage that is now paid off? Did you buy it to cover lost income but you are now retired? Did you buy it to replace lost income but you plan on working longer than expected? Are there new concerns in your life such as paying for long term care? You must review your polices to make sure they are keeping up with your changing life.
In previous blogs, I have reviewed the importance of reviewing term policies. Therefore, I will quickly touch on it. Many term policies have conversion privileges. This means you can convert your current policy into a new permanent policy without proof of insurability. If you have had a health issue that may preclude you from coverage or a favorable rating comparable to what you have, converting would qualify you for the same rate you have on the term policy. Each carrier has different rules for conversion. Examples are when you can convert and what products you can convert to. Don’t miss this benefit because you didn’t know their rules.
Do you currently have a loan on your life policy? The ability to borrow against your cash value is a great advantage of a life insurance policy. However, it is important to know how it impacts your policy and what options you have to make sure your assets are being used as efficiently as possible.
Life Insurance policies have many moving parts. It is important to review these policies and make sure you have what’s best for you! I would be happy to work together with you to help you achieve all of your goals. I can be reached at david@cnrinsurance.com or 443-321-0187.
