You may already know these things, but your children may not. Take advantage of your knowledge to urge your loved ones to reevaluate their life insurance policies with the help of the following checklist. Also, check to see whether some items might apply to you.
Taking the fullest advantage of your policy’s benefits requires adjustments from time to time due to the many changes that life brings us. Getting married, having a child and buying a home are big events that will make it necessary for you, as part of your financial planning, to review your policy. But those aren’t the only events. Consider evaluating your policy in any of the following situations:
- Just married. Have you just tied the knot? Check to see whether the coverage you have is still right for you. Update your list of beneficiaries to include your husband or wife and, if applicable, submit a name change for yourself. You might even consider life insurance for your new spouse.
- Welcome, baby! As your family grows, you need to be sure to update your list of beneficiaries. Plus, with the responsibilities that come with the birth or adoption of a new child, you’ll almost certainly need greater coverage. Remember that the skills required of the primary caregiver to a child, aren’t easy to replace, and when they’re missing, care is costly.
- New house. Becoming the owner of your own place is an emotional event. Given a decision as important as buying a new home—or refinancing your current home—consider purchasing a policy with broader coverage, to ensure that your mortgage lender’s requirements are still covered in case of your death.
- Loans or withdrawals for important goals. Your family goals—such as providing for a child’s or grandchild’s college education or saving for retirement—can be affected should a death occur. The income from life insurance could be used to help finance these goals. There are policies that allow withdrawals or loans that can be used to supplement retirement income or help pay for college. But if you choose that option, you should know that loans and withdrawals may reduce the policy’s cash value and death benefit and increase the possibility that the policy may expire. It could even result in a tax debt if the policy is canceled before the insured individual’s death.
- The purchase, sale, or start-up of a business. If you leave your current job to begin a new business be aware of the changes in life insurance coverage when you leave your employer’s benefit plan. Or you might want to review your objectives and consider the ways that life insurance can be used as a business tool. For example, for purposes of succession of a business, you might be interested in obtaining coverage to finance a Purchase-Sale Agreement. In certain circumstances, you might consider making the partners in the business your beneficiaries.
- Changes in employment. You have a new job. That’s great, but you should pay attention to the benefits offered by your new employer. Offering life insurance as a benefit for employees can vary from employer to employer, and that benefit should be taken into consideration when you review your personal policy.
With annual reviews, you can update and maintain life insurance coverage that will support your loved ones and allow them to achieve their goals and meet their financial obligations when you’re gone. When some major event occurs in your life make sure to sit down with your insurance expert and reexamine your policy. That way, you’ll be better prepared for whatever life brings.
The insurance products are not insured by the FDIC, nor by any other government agency, are not deposits or obligations of, nor are they guaranteed by Banco Popular, its subsidiaries and / or affiliates.