When Do You Need to Change Your Life Insurance Policy?

Posted by: Ryan Kimes, CFP®

When you decide to get life insurance, you’re essentially looking beyond yourself. You understand that life insurance is necessary to protect your family after you’re gone.

Sometimes, however, circumstances change, and you have to make changes to your policy to ensure your goals are achieved.

 There are numerous forms of life insurance policies, understanding which is the best for you is critical for you and your family's security and financial well-being. Sentinel Wealth Management does not sell insurance products for a commission, but includes objective insurance recommendations and advice to our clients.. 

There are numerous forms of life insurance policies, understanding which is the best for you is critical for you and your family's security and financial well-being. Sentinel Wealth Management does not sell insurance products for a commission, but includes objective insurance recommendations and advice to our clients.. 

Here are several matters to consider periodically if you have a long-standing policy:

1.    Paying your mortgage

Ideally, if you’re approaching retirement or have already retired, you should have paid off your home mortgage. Traditionally, lower retirement incomes can make mortgage payments difficult. However, mortgage and other debt is becoming increasingly commonplace among older Americans.  In fact, research shows debt levels among retirees over the age of 75 have risen by nearly 20% between 2007 and 2016. Mortgage debt has nearly doubled in the past 20 years. 

Financial analysts say eliminating mortgages should be a top priority before retiring.  Without a mortgage you may decide to lower your policy’s face amount—and your premiums—since you won’t need the higher policy proceeds. The additional income—and lower monthly expenses—will make for more manageable retirement budgets. 

2.    Becoming guardians of grandchildren

Sometimes tragedy or misfortune requires you to become your grandchildren’s guardians. More than 6 million children in the United States live with at least one grandparent, which is 9% of the population of children in the country. That’s 56% of children who are not living with their parents.  Reviewing your policy coverage, which may include adding your new dependents, may help secure your grandchildren’s future.

3.    Divorcing your spouse 

Although today’s retirees live longer, the divorce rate among older Americans is climbing. Called “gray divorces,” the rate among people 65 and older has nearly tripled since 1990.  Changes in your marital status may require you to change your beneficiary designations or reduce your coverage. Former spouses generally don’t need the higher protections under joint policies.

4.    Marrying later in life

On the other side of the relationship fence are first-time marriages or remarriages. When you enter into a new relationship, you should revisit your policies (or buy new ones) to ensure your loved ones are insured. Most policies allow you to name primary and contingent beneficiaries. 

If you’re ready to make changes to your policies, give us a call. We’re ready to help you make the most of your opportunities in the most biased way possible.
 

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