New Year's Resolution: Review Your Life Insurance Policy

The new year is approaching! A good way to start off 2016 is to review your life insurance coverage and determine whether or not your policy is a good match for your lifestyle and financial obligations. The following tips will help you determine whether or not it's time to update your policy.

Check for Adequate Coverage

Your life insurance policy might have been adequate for your needs at one time, but if your family has grown, you've taken on a mortgage or your salary has increased, your old insurance policy may no longer be adequate.

Determining how much coverage is enough can be tricky. Talk to your spouse about how he or she would manage the money if you were to die. Spending down the insurance money would usually be a poor way to manage the payout, because once the money's gone, your loved one will simply have to find work in order to care for your family. Investment is a better way to manage your payout.

To determine how much money your spouse would need each month in order to live comfortably, then talk to an investment banker. Find out what your investment options are and how much you can expect to get per month if you were to invest your insurance money. Knowing what rate of return you can plan to get for your money will help you determine how much is enough. Once you know how much money will enable your spouse to draw out a monthly amount equivalent to your salary, then you'll know how much life insurance is adequate for your needs.

Check for a Reduction in Rates  

Lifestyle choices like smoking, poor dietary habits and lack of exercise can increase your life insurance rates. If you've recently made positive changes to your health, you may qualify for a rate reduction. Contact your health insurance company to find out whether or not you're paying an inflated rate based on old habits (like smoking). Your insurance company may require you to get a physical, but once this is done, you could get a rate reduction for your insurance premium.

For more information about your life insurance policy and to find out whether or not your life insurance is right for you, contact your insurance agent. He or she can help you determine if you have the proper level of coverage and whether or not the rates are appropriate given your current lifestyle choices. Making these changes to your life insurance policy can help ensure that your policy will be adequate for your needs in 2016.