As important and unavoidable as getting your medical exams and annual checkups.
You’ve purchased a life insurance policy and taken an important step towards your financial security. However, often overlooked is the fact that you must review periodically your policy to ensure it is aligned with your financial goals. Javier A. Rodríguez Torres, Esq. from Popular Risk Services is well acquainted with the issues that could affect you and the preventive care you need, and gave us 3 key reasons we should be aware of that require a review of life insurance policies.
As a first step, it is important to understand what type of insurance you have among the different kinds available in the market. “There are life insurance policies with coverage lasting over a specific period of time; others are designed to last a lifetime,” the expert explains. A few examples are Term Life Insurance policies (with coverage for a specific period of time, serving the beneficiary in case of premature death) and Permanent Life Insurance policies (which offers lifetime protection, as long as the corresponding premiums are paid). “There are also some policies that have an accumulation component,” explains Rodríguez, referring to the policies such as Variable Life, Indexed Universal Life, or Whole Life. “In these policies, you pay a monthly premium, and part of that premium goes into an accumulation account which can later be used to supplement your lifestyle needs during retirement,” he adds.
Rodríguez provides some of the reasons to do a review, which could provide an opportunity to improve your insurance planning. How often should this be done? According to the expert, every one or two years, depending on your type of insurance.
- Life changes. Should your insurance policy change as well? – Yes! If you got married, had kids, got divorced, widowed, changed jobs or retired, moved, or bought a home since you acquired your policy, it’s time to review your policy. “Perhaps now you need less coverage, to restructure your existing policy, or, on the contrary, buy more coverage or extend its duration. It is important to consistently review that your policy continues to meet your objectives,” Javier points out.
- New regulations? Medical advances? Yes, they also alter the scenario – Estate and tax laws in Puerto Rico and the United States are ever-changing. A review will help identify if you need to change policies or add endorsements that would better protect you and your family. Likewise, medical advances that help extend your life expectancy—including successfully overcoming illnesses like cancer—end up benefitting your situation in the world of insurance policies. “The truth is that all of these medical advances help us live longer. Cancer survivors or those with preexisting medical conditions, that in the past could not buy life insurance policies, could now be insurable. The medical underwriting process has become more flexible and thus offers more options for clients,” says Rodríguez.
- There are variables that could change everything - Did you buy a permanent life insurance policy in the late 90’s or early 2000’s? Back then, companies ran illustrations using high policy interest rates or rates of return that would cover the costs of insurance charges beyond a certain age and produce supplemental income for your retirement. “However, in the low interest rate environment of the post 2008 financial crisis, those assumptions have not held true. It’s possible that your policy may have underperformed and it’s no longer able to achieve its objectives,” he emphasized. Likewise, if you took distributions or policy loans from your cash values and these details are not carefully reviewed, you could unwittingly shorten the life of the policy.
Reviewing your policy alongside a Popular One expert will benefit you, because “we help you design a policy that is in line with your particular needs and objectives.” To begin this process, you only need to have your current policy on hand and call (787) 281-7272 or write us at www.popular.com/en/popularone/contact-us/
Insurance products are not deposits, are not FDIC insured, nor are insured by any federal or governmental agency, are not guaranteed by the Bank, its subsidiaries or affiliates, and may lose value. Popular Risk Services is a subsidiary of Popular, Inc. and an affiliate of Banco Popular de Puerto Rico.