Is my life insurance working for me?
Chris Clare
So you took out a life insurance policy four or five years ago that gave ample coverage for your financial needs and in that regard it should still be giving you the best deal for your money, right? Wrong. If you think like this you might as well take your money and spend it on lottery tickets in the hope that some day your numbers might come up and you hit the jackpot.
The chances are the life you are living today is very different from the life you were living 4 or 5 years ago. Let's look at an example. A little more than 5 years ago Mr.x was single, fancy free, raking it in as an internet whizz, with expensive and dangerous pass times like snowboarding and base jumping, with an active social life, a posh rented condo and little or nothing to hinder his life motto of living fast and dying young. Now Mr.X has a Mrs.X and a couple of little baby X's running around. The high paid job has given way to a steady safe not so highly paid job, he has a mortgage on a three bedroom semi, nursery fees, school fees, golf club fees and his wife's gym membership to pay for and the disposable income isn't as disposable as it used to be.
Maybe a bit extreme, but not that far from the truth for a lot of us. The life insurance he had before wouldn't even scratch the surface for what he needs today. Everyone's circumstances are likely to change as their lives change, so it is always important to look at your changing status and make the necessary allowances for them. Maybe for you all is as it has been and you have no need to review, but if not, by reassessing your life insurance needs, you can rest easy knowing that all potential outcomes are well covered for.
The most sensible course of action is to arrange an appointment with your agent. They will be the best placed to assess your policy and find what changes would be most beneficial for you. It may be the case that you will need to increase or decrease your policy in order to save money but by taking into account changes in your situation they will be able to instigate the appropriate contingency plans to insure against the possibility of financial strife on your part.
There are term life and whole life options and, depending on your needs, one will most likely be a hugely better option for you than the other. You can factor in the possible need of borrowing against the policy to cover short term financial issues against the slightly lesser cost of the term life policy.
The most popular option for most is whole life due to the fact that the small cost difference is outweighed by the advantages of being able to cover any financial surprises that may arise. Basically, depending on the situation that occurs you can either cash in the policy, or if the problem is minor, you are able to borrow aganst it. In other words it is a policy that allows for access without incurring harsh penalties.
The decision will come down to what suits you and your family's financial predicament. The best source of advice for this is to either contact your life insurance agent, if you have one, or check through the various websites if you have gained a policy over the internet.
In short, deciding on whether or not to review your life insurance policy should be simple........just do it. You will just have to answer a few questions about your current life situation and the financial advisor wil point you in the right direction. After all, life insurance is supposed to be there to insure against the difficult aftermath of an unexpected life altering event. There is never a good time for someone to die or go bankrupt or be injured and be deemed unfit to work again, but it happens all the time. At least by reviewing your policy according to your personal needs, you can rest easy that life's big surprises are insured against. If the worst happens, you have covered yourself for it, and if your life carries on smoothly without a hitch, you have accrued a nice healthy nest egg which you can enjoy for the rest of your days with your family.....or perhaps you'll take up snowboarding again! At least the choice will be yours.
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