Greetings!  

Life insurance is initially purchased for a variety of reasons. We buy it to provide for our loved ones, pay final expenses, cover children's future expenses, replace a spouse's income, pay off debts, buy out a business partner's shares, or pay estate taxes, just to mention a few of the more common motivations.

Whether you have term life insurance for your short term needs or cash value life insurance for your long term needs, it is important to review the reasons for carrying your life insurance every few years as changes happen.

For example:

• Did you buy insurance to replace your income when you had a stay-at-home spouse and young children? If the children are grown, do you still need the coverage?

• Does your policy have any riders that provide benefits beyond the standard contract agreement?  If so, are those rider benefits still needed or could they now be dropped?  

• Have you reviewed your beneficiary designations within the past few years? Do any need to be changed or updated?

• Do you have enough cash value in your policy to stop or reduce premiums, allowing the accumulated cash value to help cover the ongoing costs? Has your income increased or your debt decreased? You may need to adjust your coverage level to correspond with your current financial situation.

Recently we met with a client who bought his life insurance policy many years ago for the purpose of providing for his spouse, paying off a home mortgage, and helping fund the new business that he was starting. He is now retired, the mortgage is paid off, the business is sold and he and his spouse are living on a fixed income. They have very little in liquid assets, but do own a second home with no mortgage which they plan to sell within the next couple of months. 

They questioned what to do with their life insurance policy as the premium costs were becoming a burden. The recommendation we made in this case was to stop making monthly premiums and let the cash value pay for the policy. Once their house sells, they'll have greater liquidity and no further need to continue the coverage.

Having sufficient life insurance is an important aspect in making sure that you and your family are taken care of. However, as your life changes so do your life insurance needs. Be aware of that and make sure to review your policies and coverage needs with your financial planner every few years.