Many people have life insurance – sometimes several policies with various institutions, which can be confusing and can also be forgotten as time goes by. Well, at least the details might be forgotten, such as who exactly is the beneficiary and how much are they designated to inherit if you die. Checking up is important because time can slip away – and it’s also a good idea to update on several issues at the same time – perhaps things that you may have forgotten, or which you didn’t know with regard to life insurance.

One: The usefulness of life insurance

Life insurance is paid out to your beneficiaries, usually your family and children. If you pass away before your children have finished school or your home paid off, then a policy payout can help with student debt and security of tenure for your family. Death can be unexpected and there will inevitably be bills and accounts left to be paid. Financial help at the time of your death is important source of support to your family during a time of grief.

Two: The payout value of your policy may fluctuate

Always keep an eye on how much your policy is worth at any given time. Make sure you receive regular statements, or that a member of your family is informed of your statements. And read these documents with intention. Policies may increase or decrease in value depending on your contributory behaviour and the type of policy you have chosen. Always re-evaluate and upgrade if necessary to keep abreast of inflation and a changing world.

Three: Other family members need to know the number and status of your policies

Discuss your policies with other family members. Address the policies in detail. Sometimes people don’t want to discuss death, but it is one of the most important discussions you can have with your family and beneficiaries. It saves the problem of forgetting what you’ve got where, and it helps to keep your policies updated and relevant.

Four: Learn how to change or update your policies

Some people don’t even realise they are entitled to do this. They set the policy in year dot and forget about it – and are disappointed if it is a term policy, at how little may pay out simply because they haven’t paid attention. Also your beneficiaries may change, grow up, and their circumstances may change. Goals and needs change dramatically. Your life insurance policy needs to reflect the current state of your living expenses. You should therefore consider updating your policy every ten years at a minimum, in order to maintain a valuable life insurance policy that reflects your financial needs, is in sync with the cost of living, and meets the needs of your beneficiaries and their changing circumstances.

Five: Understanding Term versus Whole Life or Permanent life insurance

Term life insurance: You will pay lower premiums for term life insurance, but your coverage is for a specified amount of time, say 20 years. One reason why people may choose term life insurance is because it is a cheaper policy in comparison to permanent life insurance. At the end of the term, your insurance coverage ends and you are not going to receive any money back.

Whole or Permanent life insurance: you will pay higher premiums, but will be allowed to accumulate cash value over time – which you can take out for living expenses if needs be. Your coverage is designed to last as long as you continue to pay premiums, and will only be paid out on your death.

Six: You can research your life insurance options

You don’t have to take the first option recommended to you. Speak to a professional but make sure you are selecting the right policy for your needs. Ask questions, learn what your policy can do for you. If you’re getting your policy through your work place, make sure you update any changes in employment, and that your new employer will match contributions as the former did; don’t just assume this is the case. Otherwise, you may not be seeing the valuation of your life insurance policy later in life because you did not realise your employer was not contributing to the plan as assumed.

Seven: The cost of a life insurance policy can be managed

Healthy is as healthy does. If you do not smoke, have no health problems, and no other risk factors, your life insurance policy can be reasonably cheap. If you’re a smoker or you have health problems, you may have to pay almost three times more for coverage. In fact, you could be declined denied coverage for having these issues. That’s why it’s a good idea to purchase your life insurance early in life, before you are beset by health issues.

Eight: You can change your life insurance

As you go through life, your circumstances change: you get married, you change jobs, you have children – so you may need more coverage as life progresses. You can bump up what you’ve got, or you can add extra policies – or you can swop altogether to better arrangements for your new lifestyle and commitments.

Nine: The advantage of a quick payout

Life insurance pays out quickly. Because it doesn’t get tangled up in estate claims, it generally pays out in days or weeks, usually inside of a month. You don’t have to wait for an estate to wind up – which can take years – so you have peace of mind that your family as beneficiaries will have quick access to the money without fuss – especially if you have kept everything up to date.

Ten: Tax-free does apply to life insurance

Life insurance proceeds are generally tax-free. The beneficiary can take out cash in a lump sum – or re-invest the money in a new policy. Understanding and confirming the amount that can be expected and received, makes things much easier for your beneficiaries when it comes to their options and planning strategies.