Woman reviewing an existing life insurance policy and checklist at her dining table.

A policy review can confirm what is working and uncover what needs attention.

5 Things to Check on a Life Insurance Policy You Already Own

By Better Family Legacy Insurance - Licensed in Georgia, Texas, Alabama, Arkansas, South Carolina, Louisiana, and more.

September is Life Insurance Awareness Month. A lot of the conversation will focus on buying life insurance.

However, some people already have a policy. They bought it years ago, placed it in a drawer, and have not looked at it since.

For me, owning a policy is only the beginning. You should also understand what you have.

A policy review does not automatically mean you need to buy more coverage or replace what you own. Sometimes the review confirms that everything is still working the way you intended. Sometimes it finds a small problem before it becomes a large one.

Here are five things to check on a life insurance policy you already own.

1. Is the Policy Active, and Are the Payments Working?

Start with the most basic question: Is the policy still in force?

Do not rely only on seeing a payment leave your bank account. Contact the insurance company and confirm the policy status. Ask when the next premium is due and whether the amount can change.

Also check how the payment is being made. Automatic drafts can fail after a bank account changes, a card expires, or money is not available on the draft date.

Make sure the insurance company has your current address, phone number, and email. An important notice cannot help you if it goes to an address where you no longer live.

2. What Type of Policy Do You Own?

Life insurance policies do not all work the same way.

Term insurance generally provides coverage for a stated period and usually does not build cash value. Whole life, universal life, and other permanent policies may include cash value, but their premiums, guarantees, and policy values can work differently.

Ask:

• What type of policy is this?

• When was it issued?

• Does the coverage end or change at a certain date or age?

• Is the premium guaranteed?

• Which values are guaranteed and which are not?

I had a client who believed she had a $5,000 life insurance policy. When we sat down to review her coverage and called the company together, they confirmed the policy was actually worth $800. She had no idea. That is the kind of surprise that no family should face at the worst possible time. Knowing the type of policy you have is important, but so is knowing exactly what it is worth today.

Do not guess based on what you remember someone calling the policy years ago. Read the contract and ask the company to explain it in plain language.

3. Does the Amount Still Match the Purpose?

Why did you buy the policy?

Was it intended to pay final expenses, replace income, cover a mortgage, leave money to family, or handle another need?

Now ask what has changed.

Maybe the mortgage has been paid off. Maybe you retired. Maybe you became responsible for another family member. Maybe funeral and other final expenses cost more than when the policy was purchased.

The answer is not automatically that you need more insurance. Your need may be larger, smaller, or simply different. The purpose of the review is to compare the policy you own with the life you have today.

4. Are the People and Contact Information Correct?

Your policy includes several important roles.

The policy owner controls the policy. The insured is the person whose life is covered. The beneficiary is the person or organization named to receive the benefit.

Sometimes those are not all the same person.

Confirm the owner’s information and review the primary and contingent beneficiaries. I recently wrote about beneficiary designations in detail, so I will not repeat that entire lesson here. The short version is this: life changes, and policy records may need to change too.

Someone you trust should also know the name of the insurance company and where you keep the policy information. You do not need to share private documents publicly. You do need to make sure the policy can be found when your family needs it.

5. Are There Loans, Cash Values, or Riders to Understand?

If your policy has cash value, ask for the current amount and find out whether there is a policy loan or withdrawal.

An unpaid loan and its interest can reduce the amount paid to your beneficiaries. Depending on the policy, loans and withdrawals may also affect how the coverage performs.

Check for riders too. A rider is an added part of the policy that changes or adds a benefit. You may have purchased one years ago and forgotten it was there.

Ask what each rider does, whether it is still active, and whether it affects the premium.

What Not to Do During a Review

Do not cancel an old policy just because someone shows you a new one.

Your age and health may be different now. A new policy may cost more, include different limits, or not be approved. Replacing coverage may also mean giving up provisions that are valuable to you.

The National Association of Insurance Commissioners advises people not to cancel an existing policy until they have received the new one. I would add one more practical step: understand and accept the new coverage, confirm that it is in force, and understand what you are giving up before ending the old policy.

Start With One Policy

You do not have to organize everything in one afternoon.

Choose one policy this week. Find the document or recent statement. Write down the company name and policy number. Then call and ask:

• Is this policy active?

• What type of policy is it?

• What is the current death benefit?

• Is there a loan or cash value?

• When is the next payment due, and can the premium change?

Looking back at a policy you already own is not about finding fault with an old decision. It is about understanding where you stand today.

Five questions to ask when reviewing an existing life insurance policy, including whether it is active and its current death benefit.

You do not have to review everything at once. Start with one policy and ask five clear questions.

A Note From Me

September is also a good time to think about what happens to employer-provided life insurance when you retire. I have a friend who worked for the United States Postal Service and was injured on the job. She is turning 65 next year and plans to retire. Like many federal employees, she has coverage through the Federal Employees Group Life Insurance program — known as FEGLI.

What she recently learned is that her coverage does not stay the same in retirement. Under the default 75% Reduction option, FEGLI Basic coverage begins reducing by 2% of the original amount each month starting at age 65 or retirement, whichever is later, until 25% of the Basic Insurance Amount at retirement remains. That means a policy that felt substantial during her working years could be reduced to a fraction of that within just a few years of retirement.

She is looking into outside coverage now, and that is exactly the right time to do it. If you have group life insurance through an employer, a union, or a federal program, September is a good time to find out what happens to that coverage when your employment ends. Do not wait until retirement to ask that question.

If you have questions about your current life insurance coverage or would like a free policy review, I am licensed to help families in Georgia, Texas, Alabama, Arkansas, South Carolina, Louisiana, and more. No pressure. Just honest information so you can make the best decision for your family.

Send me a message at info@betterfamilylegacy.com or drop a comment below. I will help point you in the right direction.

Peace comes from knowing, not guessing.

This article is for educational purposes only. Life insurance policies, premiums, cash values, loans, riders, guarantees, tax treatment, and replacement consequences vary by company, policy, state, and individual circumstances. Review your contract and speak with the issuing insurer or an appropriately licensed professional before making changes. Better Family Legacy Insurance is not providing legal or tax advice.

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Life Insurance Policy Review: 5 Things to Check