Life insurance often plays a central role in financial planning, yet it’s one of the most overlooked areas when it comes to regular reviews. Many people purchased various types of coverage years ago and assume it’s still doing its intended job. 

However, just like your retirement plan, investment process, or tax strategy, your insurance needs are also subject to significant changes over time.

At Sherr Financial Associates (SFA), our Boston-based financial advisors encourage you to view life insurance as an integral part of your ongoing financial plan, rather than a “set it and forget it” product. 

In this article, we’ll explore some of the most common questions individuals ask when evaluating whether their policy still aligns with their goals, family needs, and financial future, and what you can do today to take proactive steps to ensure you and your family are adequately prepared and covered in the future. 

How Often Should You Review Your Life Insurance Coverage?

The general rule is to review it every three years or anytime a major life event occurs. Some of the main concerns related to life insurance include: 

• “I bought my policy years ago. Does it still fit my needs?”
• “Have my dependents or income requirements changed?”
• “Will my current coverage still protect my family if something happened to me?”
  

A life insurance audit starts by reviewing three key areas: coverage amount, policy type, and cost. Ask yourself these questions. If you answered yes to one or more, then reviewing your policies is the right decision:

• Have your debts (like a mortgage) increased or decreased?
• Has your income changed significantly since you first bought the policy?
• Have your family responsibilities or goals changed (new children, grandchildren, goals, or business partners)?
  

A financial planner in Boston can help assess whether your current coverage still aligns with your broader wealth management strategy, or whether it needs to be adjusted for today’s evolving realities.

Term of Permanent Life Insurance: What’s Right for You?

Many people aren’t entirely sure what kind of coverage they have until they need it. The difference between term life insurance and permanent life insurance can have a major impact on cost, duration, and flexibility.

Common concerns related to the type of policy you have and/or should have include: 

• “Do I still need my term policy now that my kids are grown?”
• “Would a permanent policy make more sense for estate and tax planning purposes?”
• “What happens when my term coverage expires?”
  

Here are some possible solutions: 

• Term life insurance provides coverage for a specified number of years: typically 10, 20, or 30 years. It’s designed to protect against financial loss during working years when income replacement matters most. Once the term ends, the policy typically expires or becomes costly to renew.
  
• Permanent life insurance, such as whole or universal life, remains in effect for the lifetime of the policyholder (as long as premiums are current). It can also build cash value, which may be used for future needs or part of an estate planning strategy.
  
• If your original policy was designed to offset the expense of young children or pay a mortgage, but those obligations have changed, your coverage may need to be restructured. 
• If you’re using life insurance for estate planning or legacy purposes, consider speaking with a Boston financial advisor at SFA to help determine whether permanent insurance offers the right balance of cost and benefits.

The Status of Your Life Insurance Company

Even well-known insurers can experience credit downgrades, mergers, or management changes that affect their long-term ability to pay benefits. Since life insurance is only as strong as the company behind it, financial strength matters. Common concerns you may have if there has been a change to the financial strength of your insurer may include:

• “What if my insurance company is downgraded?”
• “Will my policy still pay out if my insurer faces financial trouble?”
• “Should I move my coverage to another provider?”
  

What to Do:

Check your insurer’s financial ratings through agencies like A.M. Best, Moody’s, or Standard & Poor’s. Look for consistent “A” level ratings or higher, which generally indicate strong claims-paying capabilities. If your insurer has experienced multiple downgrades, consider consulting with a Boston financial advisor to determine whether replacing or supplementing your coverage is a sensible option.

The Importance of Keeping Your Policy Beneficiaries Updated

This is one of the most common oversights people make, and one of the easiest to fix. Life changes such as marriage, divorce, or the birth of children or grandchildren often require updates to beneficiary designations. 

• “Do my listed beneficiaries still reflect my wishes?”
• “Have I included secondary beneficiaries?”
• “Should I coordinate beneficiaries with my will or trust?”
  

What to Do:

Review beneficiary designations annually or after any significant life events. Ensure the names and relationships listed are up-to-date and spelled correctly. Then, coordinate your designations with your estate plan to prevent potential conflicts between your will and your insurance policies.

Insurance Premium Costs 

Another reason for a review is to obtain answers to important questions:

• “Why are my premiums increasing?”
• “Is my policy losing cash value?”
• “Can I lower my payments without losing coverage?”

These are frequent questions, especially among those who’ve held the same policy for several years. Over time, the cost of insurance inside a policy can rise due to factors such as age, lower interest crediting rates, or underperforming investment subaccounts. 

Policies such as universal or variable life insurance are particularly sensitive to market performance. When returns lag, the cash value may not grow fast enough to offset inflation or increasing insurance charges.

If you’re noticing higher premium notices or declining cash values, it may be time for a policy review. In some cases, adjusting coverage levels, reducing riders, or reallocating investment options can help restore balance without letting the policy lapse. 

What to Do:

Review your annual policy statement to see how cash value, fees, and coverage are performing. Compare your current premium to your original projection. If costs have increased unexpectedly, your policy may require adjustments.

If you have a term policy nearing expiration, consider whether converting to permanent coverage makes sense in light of your current goals.

Your Boston financial planner can help you decipher the fine print and determine whether continuing, replacing, or supplementing your coverage fits your broader financial plan.

How Long Do You Realistically Need Life Insurance? 

As you reach retirement or pursue financial independence, your need for insurance may shift from income replacement to taxes, legacy, and estate planning. When meeting with a financial planner in Boston, ask them questions like: 

• “Do I still need coverage now that my mortgage is paid off?”
• “Can life insurance help with estate taxes or wealth transfer?”
• “Should I reduce or repurpose my coverage?”
  

What to Do:

It’s essential to reevaluate your goals regularly. Is your insurance meant to replace income, protect a spouse, or leave a legacy? If you are already retired, consider whether life insurance can offset estate taxes or provide liquidity for your heirs.

If you no longer need as much coverage, you may consider reducing your death benefit or surrendering unneeded policies after reviewing the tax implications with your advisor.

At Sherr Financial Associates (SFA), we help individuals and families throughout the Boston area integrate their life insurance decisions into a broader financial strategy that includes investment management, tax planning, and estate coordination.

Let’s connect to discuss your insurance planning needs.