The Student News Site of North Carolina A&T State University

The A&T Register

The Student News Site of North Carolina A&T State University

The A&T Register

The Student News Site of North Carolina A&T State University

The A&T Register

    Reviewing your life insurance policy: why and when

    If it’s been awhile since you first bought your life insurance policy, you may find that your life has changed dramatically since then. Perhaps you’ve gone through a divorce, added a second income or had a child. Whatever the change may be, it’s important to regularly look over your policy to make sure that it best reflects your current wishes and meets the current needs of your family.

    When to give your policy a second glance

    Any significant life change should be an indicator that it’s time to sit down and review your life insurance policy. If you have experienced any of the following changes, it may be a good idea to review your coverage:

    * A change in marital status

    * Purchasing a home

    * Having a child

    * Changing jobs or starting your own business

    * Becoming the primary caretaker for an elderly relative

    * Paying off your home

    * Sending children off to college, have children that are approaching college-age or have children already in college

    * Getting close to retirement

    Switching from term to whole life

    The two most common policy options are term life and whole life. Term life insurance is, quite simply, insurance that protects you for a specific period of time, or “term.” Premium payments are made during the period of time you’ve selected to be covered, or “term.” If something happens to you during that term, your loved ones receive the payout from your policy. Term life insurance has lower initial premiums than other types of insurance, which makes it suitable for budget-conscious families.

    Whole life insurance is financial protection that covers you for your entire life. Quite simply, when you own a low-cost whole life insurance policy, your payments never change, and as long as you pay your premiums when due, your loved ones will receive the insurance payout.

    A whole life insurance policy also builds cash value that, in most cases, grows on a tax-deferred basis. Better yet, not only may your death benefit – the amount your loved ones receive when you die – increase, but once there is cash value, you can borrow up to that value to use as you see fit.

    In many cases, it’s possible to switch all or even a portion of your term life policy to whole life if you decide it is a better fit for you and your family.

    Changing your beneficiary

    If it’s been a while since you’ve looked at your policy, you should review your beneficiary or beneficiaries. Is the person, or persons, you named still who you’d want on your policy?

    Changing beneficiaries is not a complicated process. Most beneficiary changes can be made by the policy owner using a beneficiary change request, including:

    * Designating an individual or multiple persons equally. Designating percentages when there are multiple beneficiaries can be done provided that the total of all percentages equals 100 percent.

    * It is not recommended to name minors as beneficiaries, without designating a custodian or trustee.

    * Designating children of an individual entitles all present and future children, both born and legally adopted, to share equally. Again, it is not recommended to designate minors as beneficiaries.

    * Designating the insured’s estate.

    * Designating a trust (this is the recommended option if you have children that are under 18 whom you would like to benefit from your policy).

    * Designating a corporation or charity. Insurance companies will likely require the name, address and taxpayer I.D. number for the corporation or organization.

    Reviewing your life insurance policy at important junctures of your life will ensure that your policy is distributed and used precisely the way you intend. This can save your family members additional burden down the road.