New Year’s Resolution: Get Your Life Insurance Ducks in a Row
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Review your life insurance beneficiaries.
All too often, people buy life insurance and then let the policy sit
there year after year without reviewing who they have designated as the
beneficiary of the policy. A beneficiary review is crucial because,
after all, what good is life insurance if the death benefit will not be
used by those who need it the most? Situations that would require a
beneficiary change are (among others!):
- a change in marital status
- one of your beneficiaries has passed away
- you have had more children
It is equally important that you have not only selected the correct
primary beneficiary, but make sure that your secondary beneficiaries are
labeled correctly as well.
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Ensure you have enough life insurance coverage.
Life insurance exists to help you protect your loved ones financially if
you were no longer in the picture. This protection tends to change over
time. You may have had significant lifestyle changes, or had additions
or subtractions to your family. Or, you could have had salary increases
over the past few years, providing your loved ones with an increased
standard of living. Remember, it is a pretty good rule of thumb to carry
coverage that is 10 to 15 times your net income. If you bought a policy
years ago, your current amount of life insurance coverage could be
setting your family up for a shortfall if you don’t address these
changes. If you are unsure about how much life insurance you may need,
start by using the nonprofit LIFE Foundation’s Life Insurance Needs Calculator.
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Find out if you can save money on your life insurance policy.
Look carefully at the underwriting class if you got anything less than
the best rates on your policy. If you were “rated” for any health
reasons (meaning that you pay higher rates because of a health
condition), you may now qualify for much better life insurance rates if
the condition is no longer present, under control or existed long ago.
This is especially true if you were a smoker, had any type of cancer,
have lost weight or have gotten your high blood pressure or cholesterol
under control.
As you can see, there are several things that you can do to make sure
that you have all of your ducks in a row when it comes to your life
insurance. By taking 10 or 15 minutes to review your existing coverage,
you make sure that your family is well covered.