Generally – once a year
As with many aspects of a financial plan, life insurance isn’t “do it once and forget it”. You want to help ensure you have the right kind and coverage to protect what’s important.
It’s generally smart to meet with your advisor to review your life insurance coverage and the rest of your financial plan.
Life events that may trigger a review
Getting married or divorced
Life insurance can help protect the financial security of a new spouse or common-law partner if you die unexpectedly.
On the other hand, if a relationship is ending through separation or divorce, you may wish to change the amount of your coverage or change your beneficiary.
Starting a family
Whether you’re adopting or having a baby, life insurance can help you protect the dreams you have for them. You’ll likely want to review your own life insurance coverage to increase your coverage amount, and you may wish to consider buying a separate policy for your child.
Buying a home
Whether it’s your home or a vacation property, you’ll likely have a mortgage to help pay for it. You put a lot of money towards your home, so it’s worth taking steps to protect your investment. Consider what insurance product is best for your situation.
Starting or selling a business
Even if you already have personal life insurance, if you’re starting a business, there are many good reasons to use life insurance to protect your company. You can also use life insurance to fund a buyout agreement if a business partner dies, insure key people in your organization, or cover outstanding loans and debts.
A change in your health, habits or hobbies
If you’ve lost a lot of weight or improved your blood pressure, or another health condition that may impact your insurance cost improves or disappears, you may qualify for lower premiums.
If you’ve stopped smoking since you purchased your life insurance, you may qualify for lower premiums as a non-smoker.
If you’re no-longer doing risky sports such as rock climbing or skydiving, you may be eligible for reduced premiums.
A significant change in your income or net worth
If you’ve won a large lottery prize or received a large inheritance, suddenly you have more to insure and a good reason to review your life insurance coverage.
The same reasoning holds if your career has taken off and you have a much larger income than you did when you took out your original policy.
Your beneficiary dies or changes
If the beneficiary on your life insurance policy changes for any reason, you’ll want to update that on your policy as soon as possible.
Estate planning
As part of your overall estate plan, review your life insurance to help ensure it aligns with your intentions for asset distribution, tax planning and support for any dependents or charitable contributions after your death.
Steps to reviewing your life insurance
- Gather your information, including your policy documents, a list of your current and future debts and your current assets.
- Evaluate your needs, assess your current coverage and explore options with the help of your advisor.
- Get a quote on any new term life insurance coverage.
- Take action on any adjustments you’ve decided to make and schedule your next review.
Benefits of reviewing your life insurance
- Help ensure your coverage matches your needs as your life evolves.
- Identify potential cost savings
- Update beneficiaries
- Adapt to changes in your financial goals
- Take advantage of new life insurance products, riders or features.