Is Your Life Insurance Still Right for You?
You bought your life insurance for a reason. Before you replace it, cancel it or buy something new, let's look at what you already have, what it was meant to accomplish and whether it still fits your needs today.
A Good Policy May Still Be a Good Policy
Life insurance is usually purchased to solve a specific problem. Maybe it was meant to replace income, pay off a mortgage, protect a business or simply leave something behind for your family.
Years later, the policy hasn't necessarily changed—but your life may have. Your mortgage may be smaller, your children may be grown, your business may look completely different, or your health may make the coverage you already own much harder or more expensive to replace.
A policy review isn't about finding a reason to change something. It's about making sure you understand what you have and whether it still does what you need it to do.
It may be worth another look when:
- Your term policy is getting close to expiration.
- Your health has changed since you bought the policy.
- Your family, income, debt or financial responsibilities have changed.
- Your business or the reason you originally bought the coverage has changed.
- You're considering replacing or canceling an existing policy.
- You're not sure who your current beneficiaries are.
- Another agent has suggested something different.
- You simply haven't looked at your coverage in years.
BEFORE YOU MAKE A CHANGE
Before You Give Up a Policy, Know What You're Giving Up
Canceling a life insurance policy is simple. Replacing it may not be so simple.
The policy you already own was approved based on your age and health at the time you applied. Years later, your health may have changed, new coverage may cost considerably more, or you may no longer qualify for the same type or amount of coverage.
Before making a change, you'll want to understand three things:
What You Have
What type of policy is it? How much coverage do you have? What are you paying? How long will it last, and what options or guarantees are built into it?
What You Could Replace It With
If you're considering something new, we need to know what you can actually qualify for today—not simply what an illustration or quote says might be available.
What Changes If You Do
Would replacing or canceling the policy actually improve your situation? Or would you be giving up coverage, guarantees, conversion options or other benefits that may be difficult—or impossible—to get back?
Never cancel an existing policy until you understand what you have, what you're replacing it with and why the change makes sense.
A Policy Review Can Lead to More Than One Answer
There isn't one outcome we're looking for. The goal is to understand what you have, what you need and what options are actually available before deciding what makes sense.
┃Keep What You Have
Sometimes the best recommendation is to leave a good policy alone. There doesn't have to be a change at the end of every policy review.
┃Keep It and Fill a Gap
Your existing coverage may still be valuable even if it no longer covers everything you need. Sometimes adding coverage makes more sense than replacing what you already have.
┃Convert or Adjust It
Some policies have options that may let you change how the coverage works without starting over. Term conversion is one important example, especially when health has changed.
┃Replace It
Sometimes replacement really does make sense—but only when the new coverage provides a meaningful advantage and you're comfortable with what you're giving up.
┃No Longer Need It
Sometimes the need for which the policy was purchased no longer exists. Before simply canceling it, it's worth a conversation to understand whether the policy has value or any other options that you may want to consider first.
Start With What You Have
Finding the right answer starts with understanding the coverage you already own—not assuming you need something new. We'll look at the policy, what you need today and whether there is any reason to make a change.
Understand
Start with the coverage you already have—what type of policy is it, how much coverage does it provide, what are you paying, how long does it last, and what important features, guarantees or other options does it include?
Evaluate
Look at what the coverage was originally intended to accomplish, along with your current family, finances, business, health and other circumstances. These may have changed since you purchased it.
Compare & Decide
If a change is worth considering, compare actual options available to you today, not just a quote, against what you currently own. The right answer may be to keep it, add to it, adjust it, convert it, or potentially replace it.
Sometimes the Best Advice Is to Keep What You Have
Recently I met with a couple, ages 79 and 73, who were looking at additional life insurance to help protect their mortgage. They already owned modest whole life policies which they'd purchased many years earlier.
We looked at what additional coverage might be available, but because of their ages and health, the cost of new coverage just didn't make financial sense.
During the course of our conversation, the husband asked me whether they should cancel their existing whole life policies and use that money toward the new coverage.
My answer was simple: No.
Those older policies were already in place, and replacing those policies today, with their current age and health, would have been difficult and significantly more expensive. Giving up good coverage to help pay for new coverage that didn't fit their budget would have made their situation worse, not better.
“If someone blindly tells you to cancel coverage you've had for years—show them the door.”
Sometimes the Policy Isn't the Problem
A policy review isn't only about whether you have the right amount or type of coverage. We can also look for important details that may have been simply overlooked or changed throughout the years.
Beneficiaries
Make sure the people listed are still the people you want to receive the death benefit.
Ownership
Confirm who owns the policy and whether that still makes sense today.
Dates & Options
Check important deadlines such as term expiration and available conversion options.
Policy Information
Review premiums, values, guarantees and other details that may affect your options.
I've seen outdated beneficiary information turn what should have been a straightforward death claim into a much more complicated process. These details are much easier to address while the policyowner is still alive and able to make changes.
You Don't Need to Have Everything Figured Out
If you have a recent policy statement or a copy of your policy, that's a good place to start. If you don't, that's okay too. Tell me what you know about the coverage and what prompted you to take another look, and we'll figure out what information we need from there.
Helpful If You Have Them:
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A recent policy statement or policy copy
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Any recent notices or correspondence from the insurance company
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Information about any new coverage you're considering
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Questions or concerns you want to make sure we address
Don't have all of that? That's fine. Start with what you have.
Questions People Ask About Their Existing Life Insurance
How often should I review my life insurance policy?
There isn't a rule that says you need to review your policy every year.
I think it makes more sense to take another look when something meaningful changes or when you simply haven't reviewed your coverage in several years.
Marriage, having a child, divorce, a death in the family, a new mortgage, retirement, business changes, health changes or a term policy getting closer to expiration are all good reasons to review what you have.
How do I know what type of life insurance policy I have?
Start with your policy or a recent statement.
It should identify whether you have term, whole life, universal life or another type of coverage, but understanding how the policy actually works isn't always as simple.
If you're not sure what you have, that's okay. Part of a policy review is figuring out what you own, how it works and which parts actually matter to you.
What should I do when my term life insurance is about to expire?
Look at your options before the policy expires.
Depending on your policy, you may be able to convert some or all of the coverage to permanent insurance, continue the existing coverage at a higher premium, apply for new coverage or decide you no longer need the same amount.
Your health and the conversion options available under your existing policy can make timing important.
Can you review a life insurance policy you didn't sell me?
Yes.
It doesn't matter where you bought the policy or who originally sold it to you.
If you have a recent statement or policy copy, we can start there. If you don't have everything, bring what you have and we'll figure out what else we need.
Can you tell me what my life insurance policy is worth?
It depends on the type of policy you own and what you mean by “worth.”
Some permanent policies may have cash value or other values that can be reviewed, while term life insurance generally does not have cash value.
If you're considering canceling, surrendering or changing a policy, it's important to understand more than one number before deciding what to do.
Can I use the life insurance I already have instead of buying another policy?
Sometimes, yes.
The first question is whether your existing coverage can accomplish what you need it to do. The second—and equally important—question is whether it should be used for that purpose.
If the policy is already protecting your family, a mortgage, a business or something else, using it for a new purpose could simply create a new gap somewhere else.
What happens if the beneficiary on my life insurance policy has died?
The death benefit doesn't simply disappear, but settling the claim can become more complicated.
What happens next depends on the beneficiary designation, whether other beneficiaries are listed and the terms of the policy.
This is one reason beneficiary designations are worth reviewing while the policyowner is still alive and able to make changes.
If the insured has already died, give me a call. I can help you work through the next steps of the claim process.
Kevin Woolley
Founder | Woolley & Woolley Insurance Group
Ready to Start the Conversation?
If you have a life insurance policy you haven't looked at in a while, or you're wondering whether something needs to change, send me what you have and we'll start there. We'll look at your existing coverage, what you need today and whether there is any reason to make a change.