Life insurance is often purchased during major milestones, such as getting married, buying a house or welcoming a child. Once the policy is in place, it’s easy to set it aside and assume planning is complete. But life changes, tax laws evolve and financial goals shift. That’s why regularly reviewing your policy and assessing whether you have the right coverage amount is an important partof sound estate planning.

Life insurance generally provides liquidity at death, subject to policy terms. That liquidity may be necessaryto cover funeral expenses, pay off debt, replace lost income for surviving family members or fund future needs such aseducation expenses. From an estate planning perspective, life insurance can also play a key role in ensuring heirs are treated according to your intentions, minimizing financial stress and preserving other assets.

A common issue that can arise when you don’t review your policy regularly is that your beneficiary designations become outdated. Divorce, remarriage, births and deaths can all change who should receive proceeds. Life insurance is distributed according to the beneficiary designations on file, not by your will or trust, which means an old designation can override your carefully drafted estate documents. A periodic review helps ensure your policy aligns with your current intentions.

Policy ownership is another estate planning consideration. If you personally own a life insurance policy on yourself, the death benefit will be included in your taxable estate. For higher-net-worth individuals, this could increase estate tax exposure. In some cases, an irrevocable life insurance trust (ILIT), if properly structured and administered, can help keep proceeds out of the estate while still providing funds for heirs or estate expenses. Even if estate taxes aren’t a concern today, future changes in wealth or tax law could make them relevant.

Coverage amount matters, too. A policy purchased years ago may no longer reflect your current financial circumstances. Inflation alone can significantly reduce the purchasing power of an older policy’s death benefit. Reviewing coverage helps ensure it continues to support your family’s needs and estate objectives.

Finally, reviewing your policy creates an opportunity for better coordination with your overall estate plan. Life insurance should work in harmony with your will, trusts and retirement account beneficiary designations. When these pieces are aligned, your estate plan is more likely to achieve the outcome you desire.

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