Life Insurance Planning Checklist

Life insurance can be a powerful tool not only for protection but also for wealth accumulation when structured and used correctly. Here are some of the most common strategies:

Use this checklist to guide your life insurance planning and ensure your policy aligns with your financial goals and personal situation:
1. Define Your Financial Goals and Needs:
- Income replacement
- Debt payoff
- Education funding
- Final expenses
- Estate planning or wealth transfer
2. Choose the Right Type of Insurance:
- Term Life Insurance (temporary, affordable)
- Permanent Life Insurance (lifetime coverage, cash value)
- Hybrid policies (e.g., with long-term care)
3. Determine the Amount of Coverage:
- 10–15x annual income (rule of thumb)
- Consider mortgages, debts, education costs, and future obligations
4. Stay Within Your Budget:
- Choose premiums you can sustain over time
- Understand cost differences between term and permanent policies
5. Consider Your Health and Age:
- Apply early to lock in lower rates
- Disclose all health information truthfully
6. Customize With Riders:
- Accelerated Death Benefit Rider
- Waiver of Premium
- Child Rider
- Long-Term Care Rider
7. Select and Update Beneficiaries:
- Name both primary and contingent beneficiaries
- Review after major life events (marriage, children, divorce)
8. Decide Policy Ownership and Control:
- Determine who owns the policy (you, spouse, trust)
- Use trusts for estate planning or minor beneficiaries
9. Evaluate Cash Value Growth (if applicable):
- Understand how cash value grows
- Know your options: loans, withdrawals, surrender
10. Understand Tax Implications:
- Death benefits are typically tax-free
- Cash value grows tax-deferred
- Avoid MEC status for tax advantages
11. Check the Insurer's Financial Strength:
- Use A.M. Best, Moody’s, or S&P ratings
- Choose a reputable and stable company
12. Review Your Policy Regularly:
- Update coverage as life circumstances change
- Review every 1–2 years or after major events