Don’t Forget About Your Insurance!

As the New Year rolls in, many of us take a little time to review our financial situation for the year ahead. Are we on track? Do we need to change anything? Are there anticipated expenses – roof, furnace, vacations, weddings etc. – that we need to save a little extra for?

 

It makes a lot of sense to do these things at the start of a new year. There are a lot of typical things that happen at this time of year that can impact your finances significantly in the year to come. Did you get a bonus? Was it what you expected or was it a Clark Griswald “Candy of the Month” kind of bonus? Did you get a little carried away over the holidays and tack a little extra debt on your credit card(s)? Did one of your kids pick a university that is going to cost you a little bit more than you thought? 

 

These are just a few of the things that can happen at this time of year and have a significant impact on your finances. Planning ahead helps you prepare for these things as best you can. If you anticipate financial strains and act accordingly, you can avoid the stress that these things can cause. Yes, there will be surprises along the way but, if you are prepared, you will be okay!

 

Often overlooked, but possibly a bigger surprise than you were planning for, could be your insurance! Don’t forget about your insurance! Besides your typical income and outflow of money and how you adjust it, your insurance should also be reviewed at this time of year. Avoid any big shocks by knowing what is happening with your insurance.

 

Annual review of insurance would include – Do we have enough insurance? Do we have too much? Do we have higher premiums coming due to a renewal on our term coverage? Do we have cash value insurance that will help us overcome unexpected financial difficulties? If so, how much do we have?

 

These are difficult questions to answer. When I ask prospective new clients about their current insurance plan, the usual response is “yes, we have coverage but I don’t know how much or how long it is for”. People tend to get it and forget it. This could cause problems! You may still need coverage but your current plan is about to renew. Your premiums could go from $50 a month to $300 a month (example only, depending on age etc.) and this could be trouble.

 

It is worth noting that insurance premiums for term insurance have dropped in price significantly in recent years so although you may be a little older, you may be able to either save on your premiums or maybe be able to extend the duration of your coverage for about the same cost!

 

The best thing to do is contact your insurance agent and get the answers you need. I will list the questions for you at the end. Unfortunately, in this business, there are many agents who sell you a policy and that is the last time you will ever hear from them. It is your responsibility to make sure you have an advisor that you can contact to get the answers you need. If you have been assigned a new advisor (this happens more often than you would think) be sure to meet him/her to make sure they are acceptable as your new agent.

 

If you cannot contact someone to answer your questions, maybe it is time to find a new advisor. At the same time, it is not a bad idea to get a second opinion on your insurance plan. This is a service that I offer, absolutely free, for anyone who needs help understanding their plan or have lost their advisor.

 

So, at this time of year, when we are preparing for the financial year ahead, take my advice and DON’T FORGET ABOUT YOUR INSURANCE!

 

Here are some questions you should ask when reviewing your insurance. Not all apply, depending on the type of coverage you have. If you don’t know, that is the first question! 

 

Is my insurance term coverage or permanent?

Term Insurance questions:

 

1. 1. How much longer is my term coverage in force before renewal?

1. 1. What will a renewal cost?

1. 1. Do I have enough coverage? (a new home or another child could impact this)

1. 1. Do I have too much coverage? (maybe an inheritance has helped you pay off your mortgage)

1. 1. Can you check current prices to see if we can save some money or extend our term for about the same cost?

 

Permanent insurance, including Whole Life, Universal and Participating:

 

1. 1. Will there be any change in my premiums?

1. 1. When is my coverage fully paid? (for Quick Pay plans such as 10 year pay or pay to 65 etc.)

1. 1. What is the current Death Benefit? (applies to Universal and PAR coverage)

1. 1. Is there cash value that I can access and how does that work?

1. 1. What would I be entitled to if I liquidated this coverage?

 

*The same questions can be applied to Critical Illness protection.