When life changes, coverage should too

How is owning life insurance like owning a car?

• Both provide a form of protection for you and your family.
• It’s easy for both car owners and policyholders to “set it and forget it.”
• Regular checkups are crucial if you want both to keep their value.

Yes, life insurance policies require regular maintenance just like cars. For policyholders, that means reviewing their coverage after certain life events or when they experience a major financial change.

It would be great if policyholders received maintenance alerts, such as the “check engine” light that shows up on a car dashboard. But there are ways for employers and brokers to encourage policy checkups when they really matter.

Start by helping your clients reinforce the importance of reviews at these key life moments:

• Marriage. It may not be the most romantic move someone can make after getting married, but updating the beneficiaries on a life insurance policy is an important one. Marriage comes with new shared financial obligations and assets to protect. Being prepared for the future is a loving gift that newly married couples can share.
• Giving birth to or adopting a child. This major family event brings big changes to parents’ lives. Reevaluating life insurance coverage after a child joins a household ensures that a policyholder is providing a safety net for loved ones. It’s another opportunity for them to update their beneficiary list to protect a growing family. It’s also a good time to remember that life insurance is a way to leave behind a financial legacy.
• Buying a home. A home purchase can quickly add to financial debt while also increasing a person’s financial assets. Policyholders should review their coverage based on the size of their mortgage and value of their new home. They should think about their family’s housing expenses if they were no longer there to support them.
• Becoming a caregiver. Employees who have started caring for an elderly parent or other family member may need to update their policies to ensure continuity. They may need to adjust their policy to make sure it will provide for the additional caregiving expenses.
• Changing careers or entering retirement. For employees who have received a promotion and a raise, reviewing their coverage is a smart move. The goal is to make sure their life insurance benefit would replace their new higher income. Retired professionals need to determine whether they still need life insurance. They may want to evaluate how life insurance would provide for a surviving spouse, leave a legacy or pay for final expenses based on their retirement financial status.

How employers can help

Most employees who have employer-sponsored life insurance have at least a basic understanding of the value of this benefit. But that doesn’t mean they couldn’t use more education on the topic, especially when their life circumstances change.

Here are three tips for employers to help workers maximize their life insurance coverage:

1. Give managers a heads-up. Frontline managers are typically the first to hear about major life events for an employee, such as a wedding or becoming a caregiver. Managers who are well-informed about employee benefits can remind their employees to update their benefit selections after a significant life change. Management training that helps managers recognize key moments in their employees’ lives can contribute to a company’s reputation as one that cares about its employees. It’s another way to position benefits as a way to attract and retain employees.
2. Offer regular benefits checkups. Employees naturally check in on their benefits and beneficiaries during enrollment season. Not as many companies proactively encourage reviews and updates at other times of the year. Scheduling and sending out quarterly or semiannual beneficiary reminders can help employees stay on top of life insurance policy maintenance. Regular reminders may also prompt employees who don’t yet have coverage to purchase life insurance in the first place.
3. Use the right channels. Employees like a mix of communication channels when it comes to receiving benefits information, according to LIMRA’s Benefits and Employee Attitudes Tracker. Email is the most popular channel, followed by online portals, in-person meetings and printed materials. Also, employees want to hear about their benefits more often than once a year. In fact, almost three-quarters say they’d prefer to receive benefit communications a few times or more frequently throughout the year. Generation Z workers, who have the least experience with benefits, are even more likely to ask for more frequent communications.

Many people wouldn’t wait until they’re stranded on the side of the road before doing routine car maintenance. The same applies to properly maintaining a life insurance policy.

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Jennifer Gassaway is a senior product manager at The Standard. Contact her at jennifer.gassaway@innfeedback.com.