How Often Should I Review My Life Insurance Policy?

Conventional wisdom dictates that, as an insurance policyholder, you should review your coverage every 12 to 18 months. This includes your vehicle insurance, homeowner's insurance, life insurance, business insurance if you carry it, and any other policies you may have. It's important to have regular reviews of your life insurance coverage since our lives have a way of experiencing  changes fairly often.

You certainly don't want to get caught being underinsured nor do you want to be overpaying for coverage you no longer need, so it's just a prudent financial practice to conduct regular reviews, especially on your life insurance policy. You may find that nothing requiring a change to your coverage has occurred since the last review, but at least by checking you'll know for sure. Here's a partial list of events that typically calls for taking another close look at your coverage to ensure that it accurately reflects your current needs:

• You've gotten married, divorced or added a new significant other to your life. You probably want to not only take a look at your named beneficiaries but also your coverage amount.
• You've either had a child or a grandchild born or one or more of your children have recently left the nest.
• You've recently taken on new financial commitments such as buying a house, an automobile, recreational vehicle, etc. These additional debts could cause undue strain for your family in the event of your untimely death.
• If you've recently finished paying off some past debts, leaving less in the way of financial commitments, you may decide to adjust your amount of life insurance coverage downward.
• If your family income level has increased significantly since first taking out your life coverage you may have become used to a higher standard of living. This is something you'll want to consider as you review the amount of the death benefit on your policy.

Reviewing your life coverage annually may actually not be often enough if one of life's big events occurs sooner. Consider meeting with your agent whenever any of these occurs.