Why Life Insurance Matters and the Importance of Policy Reviews

Why Life Insurance Matters and the Importance of Policy Reviews

Life insurance is more than just a safety net; it’s a crucial part of your financial well-being. According to the 2025 Insurance Barometer Study, 51% of American adults have some form of life insurance coverage, yet 40% believe they need more*. This gap in coverage can have serious consequences for families, especially if the primary wage earner passes away unexpectedly. In fact, nearly half of adults say they would struggle to pay living expenses within six months of losing their primary income*.

Why Life Insurance is Essential

Life insurance provides financial security for loved ones in the event of an untimely death. It ensures families can maintain their standard of living, pay off debts and cover essential expenses. Men are more likely than women to have life insurance, with 54% of men reporting coverage compared to 48% of women*. However, the coverage gap for all Americans is significant.

“Life insurance is a critical component of any financial plan. When we meet with clients to establish or review holistic financial plans, we discuss the importance of annual reviews. Often times, clients will experience a change in marital status or a serious illness or disability, and forget to share it with their financial advisor,” explains Mitchell LaFlam, vice president of Chelsea Groton Financial Services and a financial advisor for Osaic Institutions, Inc. “Life events can have a major impact on insurance coverage and one’s overall financial plans, so it’s critical an advisor is informed when things change. Think about this: when a group is planning a vacation, you’d rarely just do the exact same thing each year with zero adjustments. Instead, the plans might be adjusted, even slightly, based on the budget, needs and interests of the group trying to get away. Life insurance coverage needs to be treated similarly; each year, we want to reevaluate them to ensure plans still provide proper coverage at the right cost as part of an overall financial plan.”

The Role of Policy Reviews

Purchasing a life insurance policy shouldn’t be a “set it and forget it” transaction. Just like other assets in your financial portfolio, life insurance needs to be periodically reviewed to ensure it still meets your needs and goals. Following are some key reasons why policy reviews are so important.

• Meeting Financial Goals: A policy review helps verify that your life insurance is aligned with your current financial objectives.
• Adequate Coverage: It ensures that you have enough coverage to protect your loved ones.
• Performance Check: It’s an opportunity to make sure your policy is performing as expected.
• Proper Structure: It validates that ownership and beneficiary designations are correctly structured.
• Cost-Effectiveness: A review helps ensure that your insurance goals are being met in a cost-effective manner.
• Confidence in Strategy: It provides confidence in your chosen insurance planning strategy or identifies a better solution.

Potential Problems with Unmonitored Policies

Without regular reviews, life insurance policies can encounter several issues.

• Underperformance: The policy may not be performing as well as expected.
• Financial Strain: Loans against the policy could be causing financial strain.
• Carrier Ratings: The financial ratings of the insurance carrier may have changed.
• Lapsing Coverage: Term coverage may be about to lapse.
• Increasing Premiums: Premiums may be increasing over time.
• Lowered Crediting Rates: Crediting rates may have lowered, making the policy less stable.
• Increased Charges: Policy charges may have increased since the original purchase.

How to Review Your Policy

Reviewing your life insurance policy is a straightforward process. Simply obtain a copy of your most recent policy statement and provide it to your financial advisor. At Chelsea Groton Financial Services, upon receiving the policy statement, your advisor will check in to understand if any life event or financial changes have occurred since your last review. Then the team will schedule time to go over any recommended changes or considerations, so a client has confidence that their life insurance solution is working optimally.

Life insurance is a vital part of a financial plan; regular policy reviews are essential to ensure it continues to meet your needs and provide proper coverage. Don’t wait until it’s too late. Schedule a policy review today to protect your loved ones and secure your financial future.

Are you interested in scheduling an initial conversation or a policy review with the Chelsea Groton Financial Services team? Call 860-570-4040.

*According to the 2025 Insurance Barometer Study, conducted jointly by LIMRA and Life Happens  

Investment and insurance products and services are offered through Osaic Institutions, Inc., Member FINRA/ SIPC. Chelsea Groton Financial Services is a trade name of Chelsea Groton Bank. Osaic Institutions and Chelsea Groton Bank are not affiliated. Products and services made available through Osaic Institutions are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.