My Term Life Policy Just Expired. Do I Replace It?
Matt and Beth are long time clients that both purchased twenty-year term life insurance contracts twenty years ago. In a recent meeting they noted these policies were winding down and asked if they should buy another to replace them.
When it comes to life insurance, the decision to renew or buy more as your policy nears its expiration is a significant one. It’s not just about continuing a service; it’s about ensuring the financial security of your loved ones. Here’s a quick guide to help you navigate this important choice.
First, assess your current life situation. Have your financial responsibilities increased or decreased? If you have new dependents, debts, or have not yet reached your savings goals, extending your coverage might be a wise decision. On the other hand, if your children are financially independent and your mortgage is paid off, you might not need as much coverage as before.
Renewing your existing policy can be convenient, especially since it often doesn’t require a medical exam. However, be prepared for potentially higher premiums. If you’re in good health, applying for a new policy could be more cost-effective.
Consider also the option of converting your term policy into a permanent one. This could provide lifelong coverage and might be suitable if your insurance needs have evolved to where permanent coverage makes sense.
Ultimately, Matt and Beth decided to purchase additional life insurance, albeit a smaller amount and a shorter term. Is this what you should do? I don’t know. But remember, life insurance is more than just a policy; it’s peace of mind for you and your family’s future. Make sure to review your needs regularly and adjust your coverage accordingly. Life changes, and so should your life insurance.
Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/ SIPC.
This is a hypothetical situation based on real life examples. Names and circumstances have been changed. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your advisor prior to investing.