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Property insurance, auto insurance, and life insurance are all intended to protect policy holders in uncertain or emergency situations. However, as we age, the risks and liabilities we face change with our circumstances and experience. It’s tempting to just keep renewing the same basic policy, but you could be missing out on savings, or on the other hand, opening yourself up to more risk than you think. If you’re renewing an insurance policy, here are some essential questions to ask your advisor, based on the type of policy.
Home/Property Insurance Renewal Questions
- Is this policy adequate to replace my house and/or belongings?
- The renewal period is a great time to take a step back and judge if your home or property value has changed this year. If you made upgrades to the house or brought in lots of expensive things, it may be time to increase your policy limit, or decrease it if you’ve done some downsizing.
- Should valuables or collectibles be insured separately?
- Some valuables and collectibles like art, instruments, or jewelry are so valuable that covering them under your basic policy would mean very high monthly payments. Your advisor can suggest when it’s safer and more cost-effective to have a separate insurance rider for high-value items.
- Do I have adequate natural disaster coverage?
- When Hurricane Harvey struck in 2017, 80% of homeowners affected did not have adequate flood insurance to protect them from financial devastation. Whether it’s tornadoes, mudslides, earthquakes, or blizzards, make sure you’ve got insurance against the worst weather your climate can dish up.
Auto Insurance Renewal Questions
- Is my coverage well-balanced with the age of my car?
- Full collision coverage is certainly essential when a car is brand-new or new-to-you, but as the value goes down, you may be paying more in premiums than your car is even worth after an accident. Your Advisor can give insight into the best balance of coverage vs cost.
- Do new plan features affect me?
- Many insurers today have started offering additional plan benefits like safe driving discounts or roadside assistance. Make sure you know what features are available to you and if they come with an additional monthly charge.
Life Insurance Renewal Questions
- Should I convert my life insurance policy?
- Converting term life insurance policies to more permanent types is one way to keep the investment of life insurance working for you long-term. But in some circumstances, it’s also not the most cost-effective, which is why asking your Advisor is a great first step.
- What are the living benefits of my policy?
- Different policies have different benefits to their living policy holders, such as guaranteed tax-deferred investment growth, collateral for bank loans and other lenders, and even advance benefit payout under certain circumstances. Make sure you understand exactly what benefits your policy offers.
- If I want to sell my policy to a third party, what do I need to know?
- Life insurance policies can seem like inescapable commitments under some circumstances. If the coverage offered by a policy is no longer wanted or needed, a policy holder might find themselves making premium payments on an investment they don’t need.
If you still maintain a life insurance policy you no longer need, you can sell all or a portion of your life insurance policy for an amount greater than the cash surrender value. This is known as a life settlement and can provide the extra income you need. Our website has answers for you, to these questions and others, like, “What is a viatical settlement?” Visit Life Settlement Advisors and learn more.
Case Study:
William, a retired divorcee, has experienced a gradual decline in health the past 3 years. The medical bills have been piling up so William decided to sell his term life insurance policy for $86,000.00. William used the funds to pay off the medical bills and check a few boxes on his bucket list.
