As we go through life, we often purchase insurance policies to protect ourselves and our loved ones. Auditing those policies to ensure they still meet our needs is essential. Specifically, life and long-term care insurance policies should be reviewed regularly, even if they are still in force.
Life insurance is a crucial component of any financial plan, as it provides a safety net for your loved ones in case of your untimely death. Your life insurance needs may change over time. For example, if you've recently had a child or purchased a home, you may need to increase your coverage. On the other hand, later in life, when your children have left the house, you may not require as much coverage. This is important because the same amount of coverage becomes more expensive as you age.
When reviewing your life insurance policy, requesting an in-force illustration is essential. An in-force illustration will show you how your policy is expected to perform over time based on your current premium and the policy's projected growth. This can help you determine if your policy is still meeting your needs or if you need to make any adjustments.
Long-term care insurance is equally important to review periodically. This type of insurance covers long-term care services, such as nursing home care or home health care. As you age, your risk of needing long-term care increases, so it's vital to ensure your policy provides adequate coverage.
When reviewing your long-term care insurance policy, check the policy's benefit period and maximum benefit amount. These factors will determine how much coverage you have and for how long. The most common rider on a long-term care policy is an inflation adjustment to your benefit. Check whether this rider uses simple or compound interest, as compound interest will significantly outpace simple interest in the long run. You should also request an in-force illustration to see how your policy is expected to perform over time.
In conclusion, auditing your insurance policies, specifically life and long-term care insurance, is important to your financial planning. When reviewing these policies, it is prudent to request in-force illustrations to ensure your policies are still meeting your needs.
Contact our office if you want a complimentary review of your insurance policies.