Clients often wonder how frequently they should revisit their current insurance plans. At Intent Planning, part of our annual review process with our clients involves reviewing their individual life insurance plans, all products they may own and whether there is need for additional solutions. This discussion includes insurance benefits, cash values, beneficiaries and any potential conversion opportunities.
We also recommend clients contact us if they have a major change in their life that may impact their life insurance needs. A new baby, marriage or divorce, the purchase of a new home, a health change, the purchase of a business or a new career choice are all examples of life events that would require a review of your insurance plans and options to ensure they continue to meet your needs. It is important to ensure your coverage keeps pace with your income and lifestyle.
Life insurance helps protect the people you care about by providing them financial support when they need it. There are two kinds of life insurance, term and permanent, both with features to meet your unique insurance protection needs.
Term Insurance covers you for a set period of time. It tends to be initially less costly than permanent insurance but increases in cost at time of renewal – usually every 10 or 20 years. Premiums can double or even triple with each renewal and therefore, the cost of insurance can increase significantly over time. At some point, usually around age 85, this type of coverage expires. Most term policies offer the opportunity to convert to permanent insurance without more health questions within a specified time frame.
Permanent insurance, like the name suggests, provides coverage for life.* There is a certain level of comfort people often get in knowing it will be there for the long term and may also even provide additional value either in the form of increased coverage or accumulated cash value, depending on the policy features.
As you move through life, your finances can become more complex. Your financial advisor will conduct a full needs analysis when you purchase life insurance and will continue to monitor those needs as your financial life changes. Depending on the type of coverage you have, there may be key product features and options your advisor will also want to review at certain dates throughout the lifetime of the policy.
These features and product options of life insurance will evoke some questions and will require periodic review.
Coverage amount – Do you have enough coverage? Have your needs changed? Do you need coverage that grows over time to keep up with your family and lifestyle?
Payments – Is your term coverage coming up to a renewal and a potential increase in cost? Do you have a permanent insurance policy with the option to change the premium payment schedule, increase or decrease payments based on cash values and investment options?
Conversion options –Are you ready to consider converting your term policy to permanent insurance based on your long-term needs? Is your conversion option getting close to the expiry date? Do you have any additional benefits on your policy that can be exercised?
Expiry dates – Is your term conversion coming up to the expiry date? Are you aware of your options in your policy?
Cash values – If your permanent policy accumulates cash value, it is useful to have an understanding of what it is and how it grows. Do you have an investment option in your policy you may be interested in depositing to? Are there cash values in your policy that can be accessed if needed?
Additional benefits – Are there any additional benefits – like term or guaranteed insurability riders – that can be exercised, added or removed?
Beneficiaries – When is the last time you reviewed the beneficiaries of your policy? Do you need to make any changes to ensure those you love are protected?
Your financial advisor should help you understand your needs and goals and help navigate you through the options available. If you have anyone that relies on you for support – your spouse, child, or even an aging parent or another dependant, it is critical you have life insurance protection in place for them when they may need it most.
A lot can happen in 12 months and your situation can change from year to year. Connect with us to review your plans and ensure they continue to fit your needs.
*Subject to policy age limits, most policies are to age 100 or higher.