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10 Steps to Review Your Life Insurance Coverage

If you have been worrying about your life insurance coverage in light of the COVID-19 pandemic, now is the time to review your coverage. The most important thing to remember when it comes to life insurance coverage, a claim will be paid even if the cause of death is a pandemic such as COVID-19.  

Ten Easy Steps to Reviewing Your Life Insurance Coverage  

1. Review the most recent Life Insurance Summary we have provided to you. If you are not one of our clients and want to do it yourself,  prepare a summary of all of your active life insurance policies. Be sure to include the death benefit, Insurance Company name, policy type (term, whole life, universal life, indexed universal life), policy date, owner (if owned by a Trust, list Trustee’s name), primary and contingent beneficiaries, annual premium, payment mode (monthly, quarterly, semi-annually, annually), cash value, policy loan/interest rate, risk class, servicing agent name and phone number.

2. Find a copy of all life insurance policies. The original policies should be stored in a secure fireproof place in your home OR a bank’s safe deposit box. Keep electronic copies of the policies (or Summary Review) on your home computer or cloud-based server like Dropbox.  

3. If you can’t locate your policies, find the most recent premium notice and call the agent listed OR insurance company to request forms needed for a new copy of your policy. Save the policy both physically and electronically.  

4. If you have a group policy with your employer, locate your benefit statement and record all relevant account information including your HR/benefit manager’s contact information.  

5. Consider whether your amount of coverage and beneficiary designations are still appropriate for your family needs. When considering coverage amounts that protect your loved ones, carefully check who you have listed as primary and secondary beneficiaries. Are they still who you want to receive the money at your death? Also consider the fluctuations and uncertainties of the stock market and whether you face a risk of unemployment (loss of group coverage) or business decline. You may conclude that supplementing your existing coverage should be explored. If you are concerned about the future and how Congress is going to pay for all the money distributed via The Cares Acts 1 & 2, increased income and estate taxes in the next few years are a distinct possibility. This may impact how much life insurance coverage you want to have. Consult with an insurance advisor.    

6. If you are considering applying for new coverage OR are currently applying for life insurance, fully and accurately answer all medical questions, especially questions that are related to any issues associated with the COVID-19 virus. If you are experiencing any of the symptoms, or tested positive for the virus, it’s likely your underwriting decision will be postponed until you are fully recovered and no longer exhibiting symptoms or have tested negative for the virus. This postponement period is typically 90 days from date of recovery. As the pandemic unfolds, you might have to attest that neither you nor any household member has within the past 30 days traveled or resided outside of the United States or by cruise ship, or has come into close contact with anyone known who has tested positive for COVID-19.  

7. Before lapsing a life insurance policy, make sure you are healthy enough to buy new insurance should the need arise. If there are current health issues and coverage is still required, review any term insurance policies and determine what the conversion privileges are. If you are sure you want to cancel coverage, you should ask your insurance advisor about the secondary market to see if you can get cash for your policy. This is called a “life settlement” and can possibly provide you with immediate cash depending primarily on your age and current health.  

8. Set up a time to review your life insurance coverage with us. We can update your Life Insurance summary and provide in-force illustrations for your permanent policies that will project future anticipated performance and how long the policy will last.  If we are not your insurance advisor, upon your request we will review your existing life, paycheck continuation, and long term care policies and summarize them for you. It is vital to periodically assess all insurance coverages so that you and your family (or business) are properly prepared when disaster chooses you. Virtual and phone meetings are available.  

9. Encourage your family (parents and adult children) to do the same.  

10. Repeat your review each year!

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