The Importance of Policy Review: Keeping Permanent Coverage Aligned with Life Changes
While Whole Life insurance features fixed premiums and guaranteed values, even permanent policies require periodic review. Life changes—such as marriages, business ventures, or changes in tax law—can necessitate adjustments to policy details to ensure the coverage remains optimized and effective.
When to Review Your Permanent Policy
A policy review should occur at least every three to five years, or immediately following major life events:
- Changes in Beneficiaries: Marriage, divorce, birth of a child, or the death of a named beneficiary.
- Changes in Ownership: When transferring policy ownership to a spouse, child, or a trust (like an ILIT).
- Financial Changes: Paying off a major debt (like a mortgage) or receiving a large inheritance, which might change your overall liquidity needs.
- Rider Utilization: Reviewing if riders like the Guaranteed Insurability Rider should be exercised or if the Accelerated Death Benefit rider’s terms are still adequate.
Reviewing Policy Performance
For participating policies, the review is also essential to monitor non-guaranteed elements, such as dividend performance, and adjust how those dividends are being used (e.g., switching from receiving cash to buying Paid-Up Additions).
Disclaimer: This content is for informational purposes only and is not financial or legal advice. An annual review with your licensed insurance agent is the best way to maintain policy efficacy.