Ron Popeil, a well known inventor, made several appearances on infomercials for the Showtime Rotisserie.
Ron was known for saying, “set it and forget it.”
“Set it and forget it” works with tonight’s dinner, but not when it comes to life insurance.
So how often should millennials review their life insurance?
The short answer is, annually. But what are you reviewing? And why?
Life Changes
One day your racing motorcycles without a care in the world. The next day you’re waking up every few hours to feed your newborn.
It’s inevitable, life changes…marriage, divorce, kids, adoption, buying a new home, starting a business, refinancing, taking care of an elderly family member. The list could go on.
You may buy a life insurance policy today, but your life will alter and transform.
It’s strange to stop and think about, but recall the end of the year. You hear people say, “I can’t believe it is December already” or “this year has flown by.”
You’re needs change over time.
“The days are long, but the years are short.”
Gretchen Rubin
READ MORE: How Much Life Insurance Do I Need?
What Should Millennials Review?
When it comes to reviewing your life insurance here are four things to consider:
1. Debt
Do you have any debt?
Home, autos, business, student loans? If you do owe money, plan to carry enough life insurance to have these paid off if the sudden and unexpected happened. Financial stress is the last thing your family needs.
2. Financial Responsibilities
Who brings home the bacon? Your income is used for several things each month…rent or mortgage, college tuition, health insurance, utilities, and the list goes on.
Consider the changes you would have to make if you went from a two income household to a one income household.
If you are a single parent, when you think about who would care for your child, what kind of financial strain would that put on the new guardian? Life insurance could provide some relief in a challenging situation.
3. Face Amount
After thinking about and discussing the questions above in #1 and #2, is the Face Amount of your policy adequate?
Remember, the Face Amount is the limit of insurance your Beneficiary would receive if you passed away
It’s not uncommon to buy a life insurance policy today based on your current season of life and buy a second life policy as you enter a new season.
For instance, you are 28, recently married. You and your wife purchase a life policy yourselves. In 10 years your life is drastically different…you have a house, a white pickett fence, and three kids. You may need a second life insurance policy to cover your changing needs.
It’s different for everyone. Like I said at the beginning, life changes. Needs change.
4. Beneficiaries
Who are the Beneficiaries on your policies? Are they still accurate?
Life changes. Don’t overlook your Beneficiaries on your life insurance policies.
Naming Your Children as Beneficiary
Yes, you can name your children as Beneficiary on your life insurance policy, providing the state you live in is ok with this (some states will not allow you to do so). However, it is not recommended. Minors will not be allowed to receive the Death Benefit of a life policy until age 18 (age 19 in some states).
Next Steps
In short, it’s ideal for millennials to review their life insurance needs annually.
The reality is your financial needs impact your entire financial outlook.
Most of us have some kind of financial goals (short term and long term).
Life insurance is a tool used to protect those financial needs. Remember, life insurance is about those at home that depend on you.
Plan on reviewing your life policies annually. Some years it may be a shorter conversation than other years.
If you see changes coming in your future, (maybe planning on having a child) you might consider buying additional coverage now versus later. This is where having a conversation each year can be advantageous.
Put it on your calendar now. Make it the same time each year.
