Retirement & Financial Planning Report

As your personal situation changes through the years, so do your life insurance needs. You should review your coverage regularly, looking for the answers to these questions:

* Do the premiums or the benefits vary from year to year?

* How much do the benefits build up in the policy?

* What part of the premiums or benefits is not guaranteed?

* How will the policy be affected by interest on money paid and received at different times?

* In what situations and through what procedures can you have access to the policy’s cash value?

* Can you convert the policy into another form of insurance or annuity?

When reviewing your policy, make sure its death benefit covers your current needs. Life changes such as births, divorce, remarriage, or even a new job might indicate that you need to make changes to your life insurance policy. In the case of the birth of a child or a new marriage, you might want to increase your death benefit—which may require a physical exam.

Your choice of beneficiary also deserves attention. There are two types of beneficiaries for a life insurance policy:

* Primary beneficiaries. They receive all or part or the policy’s death benefit if they outlive you, the insured individual.

* Contingent beneficiaries. These parties, also known as secondary beneficiaries, receive death benefits if a primary beneficiary dies before the individual does.

If you name more than one beneficiary in either category, be sure to include the percentages of the death benefit each one will receive. If you want an even split, you can put “equal shares” on the beneficiary form.

When naming a beneficiary, use the individual’s legal name—for example, specify “Joan Adams” rather than “my wife.” In case of a divorce and remarriage, “my wife” could be interpreted either as your spouse when you bought the policy or your spouse at your death.