Review Your Life Insurance

The reason this blog should be important to you is that your life insurance program could be a mess and/or you are paying too much into it, and you might not even know it. Many people own life insurance policies that have cash value. They can be “whole life” or “universal life” (sometimes called “adjustable life”) policies. These policies need to be reviewed at least every couple of years. I wish all insurance agents would do this as part of their service, but unfortunately they do not. Following are some reasons why you should review your policies:

  1. Make sure the policy is being funded enough so the policy will last as long as you intended. Many universal policies were sold in the 90’s assuming very high rates of return and not enough premium assumptions. This caused many to not perform well and run out of cash.
  2. Your policy could be invested in the stock market and may not be performing well.
  3. Look to see if there is too much cash value. In my opinion, the goal is to give the insurance company only as much premiums as is necessary. You might be able to stop paying premiums. Have your agent run an “in-force ledger” assuming no further premiums, current insurance costs, and the guaranteed interest rate return. This will show you if you can stop paying premiums.
  4. You may no longer need as much life insurance. This can happen because your savings have increased or you no longer have a mortgage, etc.

Most people that I talk to have their life insurance program on auto-pilot. That is not a good idea. Take time to review it. Call us if you need a second opinion.