Performing a periodic life insurance check-up can be as
important to a family’s financial health as a medical check-up is
to one’s physical health.
Performing a periodic life insurance check-up can be as important to a family’s financial health as a medical check-up is to one’s physical health. Here are some things you should be concerned with in performing your check-up.
Locate your policies. Sounds obvious, but you may have personal policies, group policies, employer-owned policies, policies within retirement plans, and policies in trusts. Know where all of your policies are.
Take an inventory. An inventory should contain this information for each policy you have: name and address of the insurance company, policy number, policy type (term, whole life, etc.), coverage, death benefit, beneficiary, policy anniversary date, annual premium, current cash value (if applicable), and the physical location of the policy.
Review the insurance company’s ratings. The financial strength of an insurance company is critical and should not be taken for granted. Your insurance agent should be able to check your company’s ratings for you.
Identify the policy owner. The importance of knowing who owns the policy cannot be overstated. If the insured person owns the policy, the insurance proceeds may be subject to taxes in that person’s estate. If the insured individual is expected to have a taxable estate, perhaps another individual or an irrevocable trust should be the owner of the policy.
Identify the policy beneficiaries. Even if you have the right amount of life insurance, you may have the wrong beneficiaries. Marriage, divorce, death of a loved one, the birth of children or grandchildren whenever major events occur in your life, you may need to change your beneficiary designations.
Review the amount of coverage. Do you have enough insurance? Do you have too much? Your coverage needs at age 40 are probably not the same as at age 50 or 60. Also, have your agent obtain an updated “policy illustration” to determine if your policy is performing up to original expectations.
Log on to www.bianchi-lorincz.com to get more information on this and other important topics to assist you in making personal and business decisions.
Doug Herring is a CPA with the accounting and business consulting firm of Bianchi, Lorincz & Co. in downtown Hollister and in Morgan Hill.
