Many of us have life insurance, whether through an employer or by way of private insurance policies we have purchased. It is easy to take that coverage for granted and many us probably do not think about the insurance at all, unless we receive an invoice or see a part of the cost of employer provided insurance on our W-2. However, like many other things in life, it is a good idea to periodically evaluate what coverage we have in place and what our actual needs may be.
It is important to understand that the needs can and will change over time. For example, when our children are grown and (hopefully) out of the nest and on their own, insurance purchased to cover potential needs of those children while they were minors is no longer necessary. On the flip side, if one is married and a child was born or adopted recently, then understanding what coverage we have in place and how much more we might need if the worst was to happen is a good idea. A newly married person might purchase insurance on a spouse or their own life while a newly divorced person might be required by the settlement to maintain life insurance payable to the former spouse.
Whatever your situation, the idea is to look at what potential life insurance needs you have – to protect family members in the event of your demise, to provide funds when a breadwinner dies, to build wealth for your heirs, to fund a buy-sell agreement if a partner dies and so on. In this process, a very good source of information would be a financial adviser who is NOT a licensed insurance sales person and is not recommending an insurance agent or company. The adviser can help evaluate your needs and give a ballpark estimate on the amount of insurance you need to add – or drop – and explain the basic differences between term insurance and the many varieties of permanent insurance.
When you have done your homework – the checkup – then it is time to see an agent(s) and get some quotes. Remember that insurance is generally a lot cheaper and easier to obtain when you are young and gets more expensive as you age. Also remember that a lot of commissions and costs are built into insurance products and do not forget to ask your agent what they get and what you receive in return. An informed client will do much better than one who has no idea.