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It's Time to Review Your Family's Financial Security

If you're like most people, three years of volatile stock prices has given you new perspective on your financial situation. It's amazing how your perspective can change when you're standing on a window ledge looking down.

It's time to come in from the ledge and take a hard look at your financial goals. Although you can't control what the investment markets will do, you can control how you prepare for retirement or your children's college education. More importantly, you need to protect your family against unforeseen financial setbacks such as the death of a breadwinner.

"Anyone who has children, gets married, buys a home or assumes other financial responsibilities needs to review his or her life insurance coverage on a regular basis," says Robert Kerzner, executive vice president of Hartford Life Insurance Co., a subsidiary of The Hartford Financial Services Group.

"Like most people, you probably already own some life insurance. You just haven't thought about your coverage since you stuffed your policy deep inside a drawer 10 years ago," says Kerzner.

While your life insurance coverage may have remained relatively unchanged, your life undoubtedly has not. It's important to periodically review your coverage to help ensure that your family is adequately protected.

A recent survey sponsored by The Hartford found that 43 percent of Americans fail to review their coverage after a major life event. A major life event is defined as the birth or adoption of a child, marriage or divorce, the purchase of a house or primary residence, graduation from college, or the completion of a child's education. More than 70 percent did not review their coverage annually, while 11 percent reported never reviewing their coverage at all.

"It's shocking that so few people review their family's financial security on a regular basis," Kerzner says. "Clearly, the life insurance industry needs to educate more people about the importance of protecting their loved ones. Their families' financial futures are at stake."

There are many circumstances that can affect your life insurance coverage, so ask yourself the following questions:

• Is your policy's death benefit adequate? If your goal is income protection, is the policy's death benefit large enough for your family to maintain today's standard of living? If the policy was purchased for wealth preservation, is the death benefit adequate to cover current estate settlement costs?

• How is your policy performing compared to the original projections? After a decade of declining interest rates, the premiums you are paying today may be inadequate to keep your policy in force for the long run. If you purchased your policy 10 or 15 years ago, you may actually be required to come up with more cash to maintain your coverage even if you own a level-premium policy. Or, in some instances, you may have to pay premiums for more years than you originally planned.

• Are you paying too much? Sometimes, you can pay less for the same amount of coverage. Or, you may be able to obtain additional coverage for the same price.

• Is the policy's ownership structured correctly? The ownership of a life insurance policy can adversely affect how its death benefit is taxed. If you purchase coverage for estate planning, it may make sense for a trust to own the policy.

• Are your beneficiary designations up to date? Births, deaths, marriages and divorces all have an impact. You would be amazed at how many people fail to update this critical piece of information.

"Your life insurance professional can help you answer these questions and determine whether or not you have enough life insurance," says Kerzne. "You may find your coverage is fine; you may even discover you need less than you own. Just make sure you reach into that drawer a little deeper tomorrow morning and pull out that old policy. Your family will be grateful you did."


Courtesy of ARA Content

 

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