Many married couples put off the decision to buy life insurance until they have their first child. The most diligent among us get life insurance immediately after the new arrival, but some still wait months or years. Once life insurance is in place, most of us don’t think about it anymore. Likewise, after we take the time to confront our mortality and decide who we will want to raise our kids in the event of our untimely death, most of us don’t revisit our wills and trusts. That can be a mistake.
To protect yourself financially and to make sure you are fully covered, setting aside time to review your estate planning documents is imperative. You should ideally review these documents every year or two.
You may want to considering the following:
Do you have enough life insurance coverage? Perhaps you bought life insurance at 10 times your income 10 years ago when you had your first child. Since then you have had two more children and have had considerable increases in wage. Is your life insurance policy from 10 years ago still enough?
Is your beneficiary still appropriate? Much can happen in our personal lives over the course of several years. People die, married couples get divorced. Perhaps you had your father as your beneficiary 10 years ago, but he has since passed away. Maybe you had your spouse as the beneficiary but you have since divorced. A few months ago, a wealthy man’s death made national news because he still had his ex-wife as his beneficiary. His current wife was taking the ex-wife to court to try to get the money she claimed should rightly be hers. The death of a loved one is hard enough on its own without fights over money.
Has your health changed significantly for the better? If you were a smoker when you bought your life insurance policy or you were overweight and you have since stopped smoking or lost weight, for example, it may be worthwhile to get quotes for new life insurance policies to see if you can get a cheaper rate. You may also be able to call your current insurer to see if they can give you a better rate based on your healthier lifestyle. (Many require signed confirmation from your physician.)
While you are analzying your life insurance, you may also want to review your will and trust. Your assets change as do your personal relationships; if there are any significant changes, you want to make sure to update the document.
One of the most responsible things you can do is to buy life insurance to protect your loved ones financially in the event of your death. In addition, you need a will and trust to dictate who will care for your children and inherit your money. However, once you have both of these documents in place, your job doesn’t end there. Take some time every year or two to make sure your life insurance policy as well as your will and trust are current.
