September is Life Insurance Awareness month, so all month I’m going to share with you helpful information about buying and maintaining your life insurance policy. I’d like to kick the month off with seven tips for maintaining your policy.
I’ve said it before and I’ll say it again: a life insurance policy is something that needs continual maintenance. It isn’t something you buy and then forget about. And while you should have an annual review with your agent, there are some things you can do yourself to maintain the policy and keep it relevant.
1. Update the address. Often, when we make automatic payments, we forget to update the address on our life insurance policies after a move. But this is a big problem as it means the insurance company can’t reach you effectively if something happens with one of your payments or your policy.
2. Update the beneficiaries. Make updates as children are born into the family, you create a trust, you go through a divorce or marriage, or you appoint new people to have guardianship over your children. In my book, Avoiding a Legacy Nightmare, you can find important information about naming beneficiaries and structuring your trust.
3. Compare actual policy performance to projected performance. If you have a variable or universal life policy, you’ll want to monitor the performance of the cash values periodically to ensure that it’s performing the way you expected.
4. Stay informed about available riders. Riders are extra benefits you can add to a life insurance policy. If you marry and have children, you may find that certain riders—such as spouse and child riders—are a helpful addition to your policy.
5. Keep track of your debt. As your debt increases, so too should your life insurance death benefit. Keep track of the debt you take on over the course of a year so you can make the necessary adjustments to your life coverage.
6. Consider the effects of inflation. When you first designed your policy, you chose a death benefit that would allow your family to maintain their current lifestyle. But as inflation drives the expense of groceries, utilities and other necessities, it crushes the scope of that death benefit.
7. Update the insurer about your health. As certain aspects of your health improve—you lose weight, quit smoking, have a baby or lower your cholesterol—you could be in for some beneficial premium changes if you let your insurer know.