Here's something most people don't think about: that life insurance policy you bought five years ago? It probably doesn't fit your life anymore. Maybe you got married, had kids, bought a house, or switched careers. Each of these moments changes how much protection your family actually needs—and yet, most policies just sit there, unchanged, year after year.
The numbers tell a concerning story. According to the 2024 LIMRA Insurance Barometer Study, 42% of American adults—that's 102 million people—say they need life insurance or need more coverage. Even more surprising? Over 30 million Americans who already have policies are underinsured, meaning their coverage wouldn't actually protect their families if something happened. Think of your life insurance like your phone's operating system. It needs regular updates to work properly. Let's talk about when and why you should review yours.
The Annual Check-Up: Why Once a Year Matters
Even if nothing dramatic has changed in your life, you should review your life insurance policy at least once a year. Pick a consistent time—maybe your birthday, the start of the year, or when you file your taxes—and make it a habit.
During your annual review, ask yourself these questions: Has your income changed? Are your debts higher or lower? Have your kids gotten older (or moved out)? Have you accumulated more assets that need protecting? Even small changes add up. A $10,000 raise might not feel life-changing, but it could mean your family needs an extra $100,000 to $150,000 in coverage to maintain their lifestyle if you're not around.
This is also the perfect time to review your beneficiaries. People's circumstances change—relationships end, new family members arrive, and sometimes the person you named ten years ago isn't the right choice anymore. Keeping beneficiaries current prevents legal headaches and ensures your money goes where you actually want it to go.
Life Events That Demand Immediate Review
Some moments in life are so significant that waiting for your annual review isn't smart. These events can double, triple, or even completely transform your insurance needs overnight.
Getting Married
Marriage creates financial interdependence. If your spouse relies on your income to pay the mortgage, cover bills, or maintain their lifestyle, you need life insurance to protect them. Even if both of you work, losing one income could devastate your family's finances. Financial advisors recommend reviewing your coverage within 60 days of getting married. If you already have a policy, you'll likely need to increase the death benefit and update your beneficiary from a parent or sibling to your spouse.
Having a Baby
This is the big one. If you don't have life insurance—or only have a small policy through work—having a child makes coverage absolutely critical. Experts typically recommend 10-15 times your annual income when you have dependent children. So if you earn $60,000 a year, you're looking at $600,000 to $900,000 in coverage. That might sound like a lot, but consider what your family would face: 18+ years of living expenses, childcare costs, college tuition, and replacing the income you provided. Here's something people often miss: stay-at-home parents need substantial life insurance too. If something happened to the parent who handles childcare, cooking, cleaning, and household management, the surviving parent would need to pay someone to provide those services while continuing to work.
Divorce
Divorce creates a complicated insurance situation. First, you'll need to update your beneficiaries—and here's where it gets tricky. Some states automatically revoke your ex-spouse as beneficiary when you divorce, while others don't. In states without automatic revocation, your ex could still receive your death benefit unless you explicitly remove them. Second, if you're paying alimony or child support, you may be required to maintain life insurance naming your ex-spouse or children as beneficiaries to guarantee those payments continue if something happens to you. Finally, you'll need to reassess how much coverage you actually need now that you're managing separate finances.
Career Changes and Income Shifts
Got a promotion? Changed jobs? Started a business? Your coverage should reflect your new income level. If you're now earning significantly more, your family has become accustomed to a higher standard of living—and they'd need more financial support to maintain it. On the flip side, if you've retired, paid off your mortgage, and your kids are financially independent, you might be able to reduce your coverage and lower your premiums. Don't forget about employer-provided coverage. If you're leaving a job that offered life insurance, you'll need to replace that protection. Many people make the mistake of assuming they're still covered, only to discover months later that their workplace policy ended with their employment.
When Better Rates Are Just a Review Away
Here's the good news: sometimes reviewing your life insurance can actually save you money. If you've made positive health changes since you bought your policy, you might qualify for significantly lower premiums.
Quit smoking? Most insurers consider you a non-smoker after you've been tobacco-free for 12 months, and the rate difference is substantial—often 50% or more. Lost a significant amount of weight? Brought your blood pressure or cholesterol under control? These improvements could move you into a better health class and reduce your premiums. Even retiring from a dangerous job or giving up risky hobbies like skydiving can qualify you for better rates.
Keep in mind that taking advantage of these improved rates usually requires applying for a new policy rather than modifying your existing one. You'll need to go through underwriting again, which includes a health exam. But if you've genuinely improved your health, the premium savings over the life of your policy can add up to thousands of dollars.
The Hidden Risks of Not Reviewing
More than 65% of Americans have insurance coverage gaps they're completely unaware of, with an average potential financial exposure of over $425,000 per household. That's not a number meant to scare you—it's meant to wake you up to the reality that what you think you have and what you actually have might be very different.
These gaps often emerge after significant life transitions when policies aren't properly reviewed and updated. You bought a house and took on a $400,000 mortgage, but your life insurance still only covers $250,000. You had twins, but your policy still reflects life with one child. Your business took off and you're now earning three times what you made when you bought your policy, but your coverage hasn't changed.
The other risk? Outdated beneficiary designations. Life insurance proceeds bypass your will and go directly to the named beneficiaries. If you never updated that designation after your divorce, your ex-spouse might receive the money instead of your current spouse or children. If your named beneficiary has passed away and you haven't updated the form, the proceeds might go to your estate and get tied up in probate for months.
How to Actually Do a Policy Review
Reviewing your life insurance doesn't have to be complicated. Start by gathering your current policy documents—you need to know what you actually have before you can decide if it's enough. Look at your death benefit amount, your premium, your beneficiaries, and when the policy expires (if it's a term policy).
Next, calculate your current needs. Add up your debts (mortgage, car loans, credit cards), estimate your family's living expenses for the years they'd need support, factor in major future costs like college tuition, and consider final expenses like funeral costs. The total might surprise you—most people underestimate what their family would actually need.
Compare that number to your current coverage. If there's a significant gap, it's time to shop for additional coverage or a new policy. If you have more coverage than you need, you might be able to reduce your death benefit and lower your premiums. Finally, review and update your beneficiaries. Make sure the people listed are still the people you want to receive the money, and verify that your contingent beneficiaries (the backups) are also current.
Life insurance isn't something you buy once and forget about. It's a living document that should evolve as your life does. Set a reminder right now—whether it's in your phone, on your calendar, or attached to another annual task—to review your life insurance every year. Your future self (and your family) will thank you for it. And if it's been more than a year since you last looked at your policy? Consider this your sign to pull it out and take a look today.
