Insurance Check-Up: Protect Your Future and Avoid Financial Surprises

Imagine this: You're sitting down for your annual financial check-up, coffee in hand, expecting to breeze through the process. But then, you realize your life insurance beneficiaries still list your ex-spouse. It's a bit awkward. Regularly reviewing your health and life insurance policies might seem tedious, but it's a crucial task that can help you avoid major financial hiccups. Neglecting this could turn minor oversights into significant surprises. Let's dive into some key considerations that can make your annual insurance review not just bearable, but perhaps even enjoyable.

Has Your Life Changed Recently?

If your last life insurance review was before your previous driver's license renewal, it's time to revisit. Consider big-ticket items and life changes like welcoming a new child, planning for college expenses, or purchasing your dream home. Ask yourself, "Will my current life insurance policy sufficiently cover these new responsibilities?" A client once chuckled nervously when he realized his policy coverage barely scratched the surface of his growing family's financial needs—don’t let that be you.

Permanent Life Insurance: Check Under the Hood

Permanent life insurance policies are like vintage cars: they need periodic check-ups to ensure they're running smoothly. Request an in-force illustration from your insurance provider if it’s been a while. Scrutinize premiums, dividend allocations, and cash value growth. You might discover issues or identify necessary adjustments before minor issues become major problems.

Term Insurance: Don’t Miss the Expiration Date

Term life policies aren’t like fine wine—they don’t get better with age; they just expire. Note the remaining years of coverage and evaluate if renewal or conversion options make sense financially. Annual renewable term policies might initially seem cheap, but could quietly become costlier over time. It’s wise to check if newer policies offer better terms or savings.

Beneficiaries: Avoiding Surprises

Beneficiary designations can lead to unexpected drama if overlooked. Beyond avoiding accidentally enriching your ex, consider whether an Irrevocable Life Insurance Trust (ILIT) is appropriate for your financial planning needs. Ensure primary and contingent beneficiaries reflect your current wishes and relationships.

Health Insurance: Navigate the Maze

Comparing plans might save you substantial money if you and your spouse have employer-sponsored health insurance. Examine premiums, deductibles, co-pays, and networks carefully. You might even find that your spouse's health insurance offers free gym memberships, providing you a legitimate excuse to procrastinate less on those New Year’s resolutions.

Buying insurance independently through marketplaces? Don’t unquestioningly renew your policy. Shop around annually; plans and subsidies frequently change. Ensure your doctor is still in-network to avoid discovering, mid-exam, that your favorite GP is now considered an expensive out-of-network luxury.

Medicare: Staying Ahead of the Curve

Medicare isn't exactly known for simplicity. If you've relocated, carefully check the availability of Medicare Supplement and Advantage plans. Losing employer drug coverage can impose costly penalties unless you promptly enroll in Medicare Part D. Medicare Advantage and Part D plan coverages vary yearly—review your medications annually to avoid sticker shock at the pharmacy counter.

Disability Insurance: Covering Your Bases

Have you ever considered what would happen if your paycheck suddenly disappeared? Disability insurance protects against precisely that scenario. Regularly review your employer’s coverage adequacy, understand waiting periods, definitions of disability, and benefit amounts. If employer coverage falls short, supplementing with private disability insurance ensures your peace of mind (and your bills get paid).

Long-Term Care Insurance: Reality Check

Long-term care insurance can be your safety net against the costly realities of aging. Confirm your coverage includes essential services like home care, assisted living, or nursing home care. Watch out for notices about premium hikes—evaluate these carefully and check your insurer’s historical rate changes. Sometimes paying a bit more upfront saves massive headaches down the road.

Other Insurance Issues: Quality Check

Reviewing your insurer’s financial strength and checking for bundling discounts is prudent housekeeping. If your insurer’s credit rating dips, your premiums could rise, or your claims might be delayed.

Final Thoughts: Why This Review Matters More Than You Think

Taking the time for a thoughtful insurance review each year may not top your list of favorite activities, but it's undeniably crucial. Regularly reviewing your health and life insurance policies helps ensure financial security, avoids potential pitfalls, and provides peace of mind. It's a small investment of time that can pay off significantly when life throws the unexpected your way. Make it an annual habit—your future self will thank you! And remember, insurance isn't just about paperwork—it's about protecting the people and future you care about most.

WHWM is here to guide you in identifying your priorities, developing a plan, and making adjustments along the way. By choosing WHWM, you're partnering with our Founder and President, Stephen Bodwell. As a CPA and CFP® professional, Stephen is committed to helping you achieve your financial goals and aspirations. Don't hesitate to take the next step toward realizing your dreams. Schedule your complimentary, no-obligation 30-minute consultation with Stephen. 

Walnut Hill Wealth Management, LLC (“WHWM”) is a registered investment advisor offering advisory services in the State of Texas and in other jurisdictions where exempt. The information provided is as of the date indicated and is subject to change.