Protect Your Wealth: Keeping Insurance Up-to-Date

Comerica Wealth Management's guide to reviewing existing policies, updating your insurance and protecting your loved ones from unexpected events.

A strong insurance policy protects you and your loved ones from unexpected disasters. That’s why professionally designed wealth plans often include annuities, life insurance, long-term care policies and other risk mitigation efforts. By building in contingency dollars, you can be better prepared for life’s unknown events.

Under most policies, insurance money may be used to cover a wide range of financial burdens. Common uses include:

• Paying estate taxes
• Providing retirement income
• Replacing lost income
• Covering funeral expenses
• Paying debts
• Protecting business owners
• Paying life expenses
• Funding buy/sell agreements
  

An estimated 100 million Americans are uninsured or underinsured, with many feeling overwhelmed by the insurance process. And, even for those who have sufficient coverage, insurance policies may not provide their intended protection. In this guide, Comerica Wealth Management’s team of experienced wealth professionals provides a comprehensive approach you can use to review your insurance needs and plan for the future.

Why Are Regular Insurance Reviews Important?

Insurance is not a one-and-done process. The reason is simple: Your life is constantly changing, and if you don’t update your insurance to match, your policy can quickly become outdated.

For example, imagine you receive an inheritance. This sudden influx of wealth can reduce your debt levels, add flexibility and improve your family’s financial position. But if you don’t update your insurance alongside this significant event, you may have coverage you don’t need or new gaps that aren’t insured.

To keep your insurance policies aligned and updated, consider these factors:

• Life events. Your current insurance policy was designed for where your life was at that time. If your life changes – increases in net worth, new family members, divorce, etc. – your policy(s) needs to change along with it.
  
• External impacts. Factors outside your control should also be considered. Major swings in the market or changes to the tax code may impact your need for insurance or the policy performance. Additionally, healthcare costs and technological innovations are important parts of your assessment.
• Periodic review. Even when life feels stable, reviewing your policies is prudent. The review process can help uncover important financial questions or policy updates that need to be taken into consideration. Many individuals review their insurance policies once a year.

Essential Steps to Assess and Update Your Insurance Coverage

It’s time to review your insurance policy.

Where should you start? How can you make sure every contingency is covered? The answer to these questions depends on your personal circumstances – that’s why many individuals choose to work with a wealth team. But if you’re going alone, here are some sample steps to include in your review:

Define Your Goals and Objectives
Before diving into the details of your insurance policies, it's important to establish a clear understanding of your overall financial goals and personal objectives. This foundational step aligns coverage with your current needs and future aspirations. By clearly defining your goals and objectives, you'll be better equipped to make informed decisions about your insurance coverage.

Ask yourself these questions to start:

• What am I trying to accomplish?
• Who am I trying to protect?
• What coverage do I need and will that change over time?
• Is my need temporary or permanent?
• What is my budget?

Note Any Significant Life Events

Significant life events often have a major impact on your insurance needs. Take stock of any recent life changes that might affect your insurance policies. This proactive approach ensures your coverage remains relevant and sufficient to protect you and your loved ones during this new life stage.

Common life events include:

• Getting married
• Having children
• Changing jobs
• Buying a new home
• Receiving a promotion
• Inheriting wealth
• Retiring
• Selling a business
  

Review Your Existing Policy

Does your existing policy still cover your financial needs? To answer this question, examine the policy in full.

Start by looking at the coverage, terms and conditions to identify any gaps or areas for improvement. Then, look for new features or riders that might enhance your policy's benefits and consider how changes in the insurance market could affect your coverage. Request an in-force illustration for life insurance policies to understand performance. Finally, look at the annuities and long-term care coverage to see if it’s meeting your expectations.

Compare Policy Options

The insurance market is constantly evolving. If your existing policy doesn’t meet your needs, it’s likely there’s a policy option out there that will. By exploring insurance providers and products, you can identify policies that offer better coverage, lower premiums or more favorable terms.

Comparing policy options also allows you to make informed decisions, ensuring you get the best value and protection for your needs. This step can help you uncover new benefits or features that provide enhanced security for your financial future.

Update Your Planning Documents

Lastly, it’s important to update your planning documents. Regular updates help to prevent potential conflicts and ensure that your assets and benefits are distributed according to your wishes. This step provides peace of mind, knowing that your plans are current and comprehensive, safeguarding your family's future.

Update documents such as:

• Beneficiary designations
• Wills and trusts
• Power of attorney
• Advanced directives
• Business documents
• Buy/sell agreements
  

Ready to Review Your Insurance Needs?

Our team of wealth professionals work with clients to review existing policies, acquire new policies and make sure you and your loved ones are protected. To discuss your needs and identify next steps, contact your Relationship Manager or contact Noah Harden or Melissa Linn to know more.