If someone were to ask you, “What level of excitement do you feel for a life insurance review,” what would your response be? You might respond that you’d rather stare at a broken TV, watch your phone recharge, or only eat celery for the rest of your life!
Before you answer and conclude that one of the above may be more appealing, consider just four reasons that you may benefit from a review of your life insurance and even find it interesting.
When Will Your Policy Expire?
What difference would it make if you lived longer than your life insurance policy? Is your policy on track, or is it “chaos in waiting?” Will poor policy performance, policy loans, incorrect ownership, or beneficiary choices lead to a mess when the policy is needed most?
It is possible that you own a policy that is preprogrammed with an expiration date that you have not counted on. Many policies are programmed to endow at age 95 or 100. The unfortunate result of this may be that you outlive your policy. While most people I speak to think that they will never live that long, U.S. demographic statistics say otherwise. In fact, between 2010 and 2015 the amount of people living beyond age 100 increased tenfold. At the beginning of the twentieth century, the average life expectancy was age 47. Today, it’s approaching 80, and that’s just the average. You may live longer than you expect. If you outlive your policy, the repercussions can be disastrous. Make sure this condition is understood and planned for in advance.
Consider Taxes
Life insurance is often discussed as being income tax-free at your death. However, a surprising number of policies are inadvertently arranged to be taxable at death. If this was the case for you, would that be a problem? If you could easily correct that problem now, would it be worth a review to find out?
Policy Performance
How do you know if your life insurance policy is performing as expected? When you purchased the policy, you were most likely shown a projection of values, but since then, have you ever seen an updated estimate? How would it compare to what you were originally shown? It’s certainly possible that the policy is outperforming its original projection, but given the direction of the economy over the past few years, it’s far more likely that the policy has underperformed. If so, what might that mean for you and your plans for those you care for?
For clients of Goostree Financial Group, we aim to update your projections every two to three years. Otherwise, the risk is that a policy left untended can fall dangerously close to lapsing if the initial assumptions the policy was purchased on are greater than the actual performance of the policy over time. It is usually far easier to adjust and correct a policy before it goes too far off track. When you receive the updated projection, you should ask two questions: "How has it performed since purchased?” and, “How will it perform in the future?"
Life Insurance Has Evolved
For those of you who are Boomers, you should know that today’s life insurance is not your father’s life insurance. It is often much more valuable and robust. For example, today’s policies can cover long-term care or chronic illness as well as premature death. They also feature the ability to direct policy cash values among several options, not just the insurer’s general account. If you need additional coverage such as long-term care, you may be able to add that coverage in a more cost-effective manner by combining a life insurance policy with a long-term care rider.
Of course, traditional reasons for a policy review are still valid. You will want to check if your beneficiaries are up-to-date, if you have the right type and right amount of coverage, and if your policy is set up to be included or exempt from taxes on your estate.
At Goostree Financial Group, we look at each policy individually and take the time to examine your policies in-depth so that you can have the peace of mind that comes with knowing your plans are on track. If you are concerned about your life insurance policy or would like a review, contact us at info@goostreefinancial or call us at (913) 663-1144.
*Fixed insurance products and services offered through Goostree Financial Group or CES Insurance Agency
About Michael Goostree
Michael Goostree is the founder of Goostree Financial Group, an independent, father-son financial planning firm serving individuals, families, and business owners in the greater Kansas City metropolitan area. With more than 45 years of experience in the financial services and insurance industries, he brings a wealth of knowledge to the table in regards to retirement planning, wealth management, and insurance. Believing plans are the key to success, he focuses on building comprehensive and personalized plans for every client he works with. To learn more about how Michael may be able to help, connect with him on LinkedIn, call his office at (913) 663-1144, or email him at info@goostreefinancial.com.