When should existing life insurance coverage be reviewed?

Having enough life insurance coverage

Life insurance protection is an important part of a sound financial plan. Life insurance is designed to pay death benefits, in the form of cash, to the beneficiaries, dependents, or the estate of an individual. Individuals are advised to review the coverage periodically, to ensure that it properly addresses the insured’s financial situation and insurance needs, and will provide the proper amount of benefits to those left behind.

A good time to review a life insurance policy is once each year, perhaps when it is time to renew other insurance policies or at tax time. At that time, individuals should assess any life changes that have occurred, such a marriage, divorce, or birth of children, to understand how the coverage may need to be updated.

Also, if a major employment change has happened, a raise, for example, this may affect the amount of coverage an individual wishes to have. As one ages, and especially as an individual approaches retirement age, the needs for life insurance change. This can be because social security benefits have kicked in or because of the death of a spouse or partner.

At each yearly review, it is a good idea to talk with the life insurance agent or company who sold the original insurance coverage, and ask how some of these changes could affect coverage, or to purchase more coverage if necessary. As long as a consumer has a valid insurance policy, it is rare that a medical exam or proof of insurability would be required to upgrade or change coverage.