Changing Times, Changing Needs

When you purchased your life insurance policy over 10 years ago, you may have thought your insurance planning was complete. You might have assumed that as long as you paid your premiums on time, you could sit back and not think about life insurance anymore.

While your life insurance may help protect your loved ones from future uncertainties, your policy should not be left to run on autopilot. Life insurance is just like any other piece of your financial puzzle — as your circumstances and needs change, periodic monitoring is essential to help ensure it will achieve your desired objectives. Here are some questions The Gardner Group wants to ask you as part of our Risk Management Review.

Start by asking yourself whether your original reasons for purchasing your policy are still applicable. Evaluate any additional needs you may have. For instance, when you first purchased your policy, you may have been newly married and owned a modest home. Now, you may have children and a larger home. Is your existing policy appropriate for your new circumstances? You might need additional life insurance to help cover a larger mortgage, pay college expenses, and contribute to your family’s financial future in the event of your death.

If your existing policy is term insurance, you may want to consider converting it to a permanent contract. Permanent insurance contains a cash value component that offers the potential for tax-deferred accumulation, along with the same death benefit features of term insurance. In the future, the cash value could be accessed to help supplement your retirement income needs. Keep in mind that withdrawals and loans taken against a policy’s cash value could reduce the death benefit, increase the chance that the policy will lapse, and may have tax consequences.

Review your beneficiary designations to ensure they still reflect your wishes. For example, if your current contingent beneficiary is a relative you named years ago, but you now have children of your own, you might choose to update your policy to name them instead. In addition, if you and your spouse set up a living trust, a legal professional may suggest naming your trust as the policy’s beneficiary.

Regardless of the type of life insurance you own and the beneficiary you choose, the death benefit proceeds from the policy will be included in your estate. As your asset base grows, you may want to periodically update your estate planning strategies to help minimize the effects of estate taxation.

Life insurance can play a significant role in securing your family’s finances. But as with all financial matters, it’s important to review your policy regularly.

The Gardner Group helps a select group of families manage their financial affairs. And often, the foundation of that financial plan starts with insurance.