Your life insurance policy plays a critical role in your financial planning and in the welfare of those you love. Because your life changes over time, you need to revisit your policy from time to time to ensure it also evolves. Changes in relationship status, work and other life events all need to be weighed to determine if a policy change is in order. Here are six life events that typically require policy updates:
- Marriage: Getting married is an exciting time, and it can be easy to overlook details like updating your insurance policy. Failing to update your policy can make it very difficult, or even impossible, for your spouse to collect benefits when you die. Make sure your insurance benefits are distributed the way you intend them to be by updating your policy as soon as you get married.
- Divorce: Divorce represents a change in your relationship status that needs to be handled as soon as possible in order to make sure your benefits are appropriately distributed. While some divorce decrees may mandate a certain portion of insurance remains in place for your spouse, most settlements do not include those stipulations. Ask your divorce attorney how soon you can remove your ex from your policy.
- Births and deaths: Having a child or grandchild is a major life change that often requires a policy update. Life insurance can pay for the needs of children through college and beyond, and they can also be used to leave a legacy to grandkids.
- Taking out a mortgage: Life insurance can relieve your spouse from the burden of making mortgage payments on their own; likewise, when your mortgage is paid off, you might decide to reduce your benefit amount.
- Job change or starting a business: Business expenses and responsibilities require careful financial planning, including updates to personal life insurance policies, especially when business loans are involved.
- Other life changes: As we get older, our priorities can change significantly, and your life insurance should reflect that. Sometimes, a change in relationship status with relatives and friends can trigger a change in beneficiary or benefit amount. Perhaps you’ve become close to a niece or nephew or you have a friend who’s meant a lot to you through the years, and you’d like to name them as a beneficiary. Maybe there’s a charity that’s become very important to you, and you’d like insurance proceeds to benefit those needs. Some people even decide to use their life insurance benefits to fund a scholarship or foundation.
Remember: your life insurance is part of your legacy, and it needs to be continually updated as your life changes. Decide carefully when it comes to benefits and beneficiaries, and then discuss your goals with your agent to make sure your policy reflects your true wishes. If you haven’t updated your policy in a while, call us at (407) 877-6110 and speak with an agent today.