Don’t make the mistake of assuming that life insurance is an entirely separate asset outside of your estate plan. Many people set up their life insurance policy early on in their working years and use it to think about income and mortgage payment replacements during this time. However, as your needs evolve, your life insurance policy may need to evolve as well. You may need an additional policy or you may trade in an old life term insurance policy for a universal life policy.
A full review of your estate plan should be conducted on a regular basis in order to evaluate where your life insurance policy simply is not performing the way that it needs to, to be in line with your estate planning goals. The ‘set it and forget it’ mentality often associated with a life insurance policy puts individuals at risk of making mistakes. A client might be under the impression that life insurance is totally outside of their other assets and may fail to appropriately account for this asset in the estate plan, missing opportunities to provide for your beneficiaries. If you have an underperforming or old policy that has higher administrative costs or yields lower interest rates than a current policy, there’s a good chance that you need a fresh look. Furthermore, you might get benefits from using an irrevocable life insurance trust and you should always take a look as we get closer to the end of the year, whether or not you have nonexistent or outdated beneficiary designations.
Some of the most common mistakes in this area include naming a former spouse, a deceased individual, omitting children who were born after the policy was issued, or naming a minor grandchild or child. Reach out to an experienced estate planning attorney today to talk about setting up a consultation to ensure that your life insurance is in line with the rest of your estate planning goals.