By Scott Ford, CEO, Founder & Wealth Advisor of Cornerstone Wealth Management Group
Life insurance is one of those financial products that you purchase and then forget about. Most of us purchase a policy, then forget about it, thinking we have done our due diligence and crossed that off the financial responsibility to-do list.
But a life insurance review, as unexciting as it sounds, may be necessary and beneficial. Like changing the oil in your car, if you put it off for too long it could lead to bigger problems. Here are a few of the reasons you might want to pursue a life insurance review:
Verify Policy Length
What would happen if you lived longer than your life insurance policy? If you live longer than your policy, it could create a mess for your loved ones. There’s a chance your current policy may have an expiration date that you aren’t aware of. Many policies are set to endow at age 95 or 100. That may seem like a long time to live, but in the past 30 years alone, the U.S. centenarian population has grown 65.8%.1
If you outlive your policy, the repercussions could be disastrous. Make sure you understand and plan for this situation, especially if you purchased your life insurance policy at a young age.
Avoid Tax Headaches
Life insurance is often thought of as being income tax-free at your death, but some policies are inadvertently set up to be taxable at death. If your policy was created this way, would that cause issues for your family? If it would, or if you aren’t sure, an advisor may be able to help you rectify this problem and create a strategy to ensure your family isn’t caught off guard.
Check On Policy Performance
How do you know if your life insurance policy is performing as expected? When you purchased the policy you were most likely provided a projection of values, but have you seen an updated estimate since then? How would it compare to what you were originally shown?
It’s possible that your policy is outperforming its original projection, but considering the direction of the economy over the past few years, it’s more likely that the policy has underperformed. If so, what might that mean for you and your plans for your loved ones?
Now may be a good time to update your projections and ensure they are on track. It’s usually easier to adjust a policy before it goes too far off course. Your advisor can help you evaluate how the policy has performed since you purchased it and how it is projected to perform in the future.
Your Policy May Not Be Up-to-Date
Your insurance needs are based on a lot of different things. Do you have dependent children? Have your kids finished their schooling? Are you still married? How is your health? What about your spouse’s? Chances are, a few of these things have changed since you originally purchased your life insurance policy. Your policy may need adjustments to account for your life changes.
Throughout the last few decades, life insurance has evolved into a more valuable and robust risk management tool, better suited to accommodate life’s changes. Today’s policies can cover more than just premature death. Options are available to cover chronic illness and long-term care, and they have the ability to direct policy cash values among multiple options — not just the insurer’s general account.
If it’s been a few years or decades since you first purchased your policy, you may need to add additional coverage, such as long-term care, with a rider, which can be more cost-effective than buying a separate policy.
Even if you don’t need to add features, you may still need to verify that your beneficiaries are current and check if you have the appropriate amount and type of coverage.
Reviewing Your Policy
Poor performance, loans, incorrect ownership, or beneficiary choices could result in turmoil just when your policy is needed most. Through an insurance update, I can help you examine your policies in-depth so that you can have increased confidence that your plans are on track. At Cornerstone Wealth Management Group, we believe in living life by design, not default. If you are concerned about your life insurance policy and feel your finances would benefit from a thorough review, call us at (301) 739-8505 or email [email protected].
ABOUT SCOTT
Scott Ford is CEO, Founder and Wealth Advisor of Cornerstone Wealth Management Group, serving entrepreneurs, business owners, executives, and their families. The firm specializes in business liquidity strategies and SBA financing strategies. It is Scott’s mission to help his clients pursue financial freedom and live a balanced and fulfilled life.
Scott is a Wealth Advisor and Registered Financial Consultant (RFC). He was recognized as one of the 20 Rising Stars of Wealth Management by Private Asset Management Magazine in 2008 based upon assets managed of $1 million or more per client. Since 2005, Scott has been an active financial technical analyst.
Clients often choose to work with Scott because of his experience with the challenges business owners and executives face as well as his firm’s disciplined process. His personal and proactive approach is designed to bring clarity and simplicity to the complex issues of financial management. For over 20 years, he has been helping his clients define and pursue their own unique version of “True Wealth.”
Scott is the author of three books: Financial Jiu-Jitsu: A Fighter’s Guide to Conquering Your Finances, The Widow’s Wealth Map: Six Steps to Beginning Again, and the New York Times Bestseller, The Sustainable Edge: Fifteen Minutes a Week to a Richer Entrepreneurial Life.
He and his wife, Angie, reside in Hedgesville, WV and have two wonderful children as well as a dog and a cat. In addition to spending time with his family, Scott is a voracious reader and enjoys woodworking, Brazilian Jiu-Jitsu, golf, hunting, permaculture and beekeeping; basically anything outdoors.