Remember to review life insurance

Life changes, and our financial circumstances change along with it. To make sure that your family is protected with the proper amount of life insurance coverage year after year, and that any claims made will be processed smoothly, it’s important to periodically review and update your coverage.

Update your beneficiaries. Does your life insurance policy list the current beneficiaries in your life? You may have gotten married, had another child, or had some other similar change in your life. If you haven’t made the change already, now is the time to revise your policy.

Update contact information. If you or your beneficiaries change addresses, phone numbers, and other contact information, make sure that this information is also updated on your policy.

Keep your policy in a safe place. If your life insurance policy is sitting in a pile near your desk, now is the time to move your policy to a safe deposit box, and make a copy of the policy for your personal records. If you’ve updated your policy, make sure current records are stored in both places.

Talk to your beneficiaries about your life insurance policy. Your beneficiaries need to know that your life insurance policy exists, so that they can claim the death benefit if you pass away before the coverage period is up. If you don’t tell them, they may never discover the policy among your belongings, and use the financial protection you put in place for them. Let them know where the records are kept, and review the financial plan with them if they ever need to make a claim.

Update the amount of your coverage. If you have another child or buy a home, you will probably need additional coverage. If one of your dependents becomes financially independent, you may need less coverage. In these cases, it can help to have a list of your life insurance needs, from which you can add and subtract specific items. Review your policy with your spouse, and talk to your insurance broker or agent. You may have the option of adding coverage to your existing policy, or you may need to purchase a separate policy to bring your total life insurance coverage up to date.

Ask if your health improvements affect your premiums. Your health is a major factor in your life insurance premiums. Smokers can pay substantially more for life insurance than non-smokers, and other health conditions can affect the price of your premium. Quitting smoking can help lower the cost of your premium, but insurers often require a lengthy period of time to pass before you’re reclassified as a non-smoker. Start the clock as early as possible on your health improvements, and ask your insurer if you can revise your policy based on those improvements. You can also try shopping for a new policy based on your improved health.

Consider guaranteed level term insurance. If you renew your term life insurance every year, your premium will gradually rise as you age and develop health conditions. A guaranteed level term insurance policy gives you the same premium throughout the term you choose, such as 20 or 30 years. If you buy a guaranteed level policy when you’re young and healthy, you can continue to pay a low premium for decades.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years experience in retail banking and with financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com

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