Checked Your Policy Recently?
Insurance is not something you would like to think about in your free time — unless of course you work in the business. As for the rest, most people generally tend to think about them only when forced to, like the time when they come up for renewal. Just as when you first buy a policy on your home, life or car, you need to make sure you have the right amount of coverage at the best price. So what should you look for when updating your policies?
How you update your life insurance depends on what type of policy you have. For term life, do a quick comparison of premiums to see if yours are still competitive. The comparison becomes even more important if you think your insurer is raising the premiums more than you expected.
In case you have a whole life insurance, try to get rid of riders that you no longer need. If there are any policy loans that are earning less than the interest you are paying on them, it is prudent to pay them off. If you don’t need as much coverage as you’re paying for, you can even ask your insurer if you can reduce the face amount. This is known as a partial surrender, and works out pretty fine, only remember to watch out for extra fees.
If you are planning to cans in your policy, try to find out options to save your taxes. You could consider a 1035 tax-free exchange. That will let you transfer your money to another insurance policy or to an annuity and continue to defer taxes on any gains made within the policy.
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