New job, new baby, new house: the yearly review that keeps coverage current

Once a year, and every time your life changes

Review your life and disability insurance at least once a year and immediately after any major life event: a marriage or divorce, a new child, a new home, a job change, a big raise or a death in the family. Each review should confirm that coverage amounts still match your obligations, beneficiaries are current, premiums are being paid, any conversion deadlines are noted, and your disability benefit still reflects what you actually earn. Most reviews take less than an hour, and many end with no changes at all.

I am a New York Life agent in Frisco, and ongoing review is a core part of how I work with clients, because a plan built for who you were cannot protect who you are now. This guide gives you the checklist I use. It is general information; for tax or legal questions, talk to a licensed professional in that field.

Life events that should trigger a review right away

Some changes cannot wait for the annual review. Any of these is a reason to pull out your policies within a few weeks, not months.

• Marriage, divorce or separation, which can change who should be a beneficiary and how much coverage each spouse needs.
• A new child, by birth or adoption, which adds years of obligations.
• Buying a home or taking on a larger mortgage.
• A new job, a layoff or starting a business.
• A significant raise, promotion or change in how you are paid.
• A parent or relative who begins to depend on you financially.
• The death of a beneficiary, or a change in a beneficiary's circumstances.

Changing jobs: what happens to the coverage from work

Job changes are where coverage most often slips through the cracks, especially in sales, where moving every few years is normal. The Texas Department of Insurance notes that if you get life insurance through your employer, coverage typically ends when you leave your job. Group coverage is usually term insurance, and a basic group policy usually pays one or two times your annual salary.

Disability coverage through work usually ends with the job as well, and the new employer's plan may not start right away. The Maine Bureau of Insurance consumer guide explains that under a group disability plan, a waiting period can mean the number of days you must be employed before you are covered. That can leave a gap between jobs, or in your first weeks at a new one, when you have no disability protection at all.

Before you leave a job, ask human resources what options exist to continue or convert your group coverage and what the deadlines are. At the new job, read the benefits summary in your first week, note when coverage begins and compare the benefit formulas with what you had. Coverage you own yourself, outside of work, does not change when your employer does, which is one reason many professionals keep a personal policy as their foundation.

The yearly checklist for life insurance

Pull every policy you own, plus your benefits summary from work, and go through each one. The Texas Department of Insurance's life insurance guide is the source for several of these checks.

• Coverage amount: does it still cover your debts and the income your family would need to replace, for as long as they would need it?
• Beneficiaries: are the primary and contingent beneficiaries correct, with full names and percentages?
• Premiums: are payments automatic and current? TDI notes most policies have a 31-day grace period after the due date.
• Term length: when does each term policy end, and does that still line up with your obligations?
• Conversion deadline: TDI explains conversion usually must happen by around age 65; check the exact date in your policy.
• Policy loans: TDI cautions that an unpaid loan lowers the death benefit.
• Cash value and dividends: review the annual statement, keeping in mind TDI's note that dividends are not guaranteed.
• Riders: are the riders you pay for still useful to you?

The yearly checklist for disability coverage

Disability coverage drifts out of date faster than life insurance, because it is tied directly to income. For commission-heavy earners, a policy that fit three years ago may now cover only a fraction of real pay. These are the checks I run every year. If the answers show a gap you are not sure how to close, my guide on what a disability policy should include explains the terms.

• Benefit amount: what would the policy pay each month compared with what you earn today, including commissions and bonuses?
• Taxes: the IRS says benefits are taxable if your employer paid the premiums and not taxable if you paid the entire premium with after-tax dollars; know which applies.
• Elimination period: could your current emergency fund cover the months before benefits begin?
• Definition of disability: does your coverage still use the definition you thought it did, and does it change after a set period?
• Offsets: which other benefits, such as Social Security or workers' compensation, would reduce what the policy pays?
• Increase options: can you raise coverage as income grows without new medical underwriting?

Raises and promotions: when protection falls behind

A promotion feels like progress, and it is. It is also the moment when the gap between income and protection tends to widen most. The household's spending rises to match the new income, the mortgage gets larger and the coverage stays exactly where it was. For the account executives and sales directors I work with, that pattern is so common that I wrote a full guide on it: a stress test for a household whose income outgrew its coverage.

A good rule is to treat every significant raise as a prompt to rerun the numbers. You do not always need more coverage, but you should know whether you do.

Pay attention to how the raise arrives, too. A higher base salary may lift group life and disability benefits automatically, while a larger commission or bonus often does not. If most of the increase is variable pay, assume your coverage has not moved until you confirm otherwise in the benefits summary.

As the years go by: term endings and long-term care

The review changes as you get older. In your 30s and 40s, it is mostly about whether coverage keeps up with a growing family. In your 50s and 60s, the questions shift. Term policies approach their end dates, and TDI notes that most companies offer term coverage only up to age 70 or 80, so you need to decide what, if anything, should replace it. Some obligations will have ended, and it may be appropriate to reduce coverage rather than increase it.

This is also the time to think seriously about long-term care, for yourself and possibly for your parents. My guide on planning for long-term care in Texas covers what Medicare does not pay for and the options that exist.

Keep the paperwork where your family can find it

A review is a good moment to update a simple one-page summary of your coverage: each company, policy number, amount, beneficiary and contact. TDI notes that it has no way of knowing whether a person had life insurance and points families to the NAIC's Life Insurance Policy Locator Service when a policy cannot be found. A current summary kept with your will saves your family that search.

If your review turns up an old beneficiary, a lapsed payment or a policy nobody knew about, my guide to the life insurance mistakes families discover too late explains how to fix each one.

Turn the review into a habit you will keep

The best review schedule is one you will actually follow. Tie it to something that already happens every year, so it does not depend on remembering. One easy option is to pair it with your employer's open enrollment, since that is when work benefits change anyway. Another is a birthday, an anniversary or the week they file taxes.

Do the review with your spouse or partner whenever you can. The person who would live with the outcome should understand the coverage, know where the policies are and agree with the beneficiary choices. That conversation is often more valuable than any change to the policies themselves.

• Pick one fixed date each year and put it on both calendars.
• Gather every policy, your latest benefits summary and your most recent pay stub.
• Run the life and disability checklists above, one policy at a time.
• Write down anything that needs a call or a form, and finish those within two weeks.
• Update your one-page coverage summary and store it with your will.

What a review with me looks like

My process starts with learning about you: your goals, where you want to be in 10 to 20 years and what is already in place. From there we turn goals into measurable objectives, look at whether your current insurance and savings support them, and identify products only where a real gap exists. Then I stay in touch over the years to keep the plan on track as your needs and circumstances change. Where a change affects taxes or your estate plan, I can coordinate with your CPA or attorney, since New York Life and its agents do not provide tax, legal or accounting advice.

I work with households across Frisco, Plano and Dallas, in person or by phone or video. Bring your policies and your benefits summary. There is no obligation to buy, and if everything is in order, I will tell you so and we will set a date to look again next year.

Questions people ask me