One of the common questions we hear from clients is about whether they should keep an existing life insurance policy. This is often both a financial and emotional decision because it can be hard to determine if the need still exists, and because it can be hard to let go of something that has given you a sense of security for a long time. Here are some steps to take if you are dealing with this question:
1. Lean on us as your advisors to help you come to a decision.
2. Ask yourself why you originally purchased the policy, and whether that need still exists, in whole or in part.
3. If the need no longer exists, then determine if you have any new goals or needs that the existing policy could fulfill.
4. If there’s no longer a need for the policy, then review the policy terms with your financial planner to determine whether any conversion options or riders exist that might help fill another gap in your plan.
5. Finally, understand that if there’s no longer a need for the policy in any capacity, choosing to keep or let go of a policy is simply a gamble on your lifespan.
We’ve never had a surviving spouse or family member complain that they received too much in life insurance proceeds, but at the same time, no one complains about extra available cash each month, either. It’s always good to revisit why you bought the policy in the first place and work with an advisor to evaluate if a true insurance need still exists.
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