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life insurance answers
Talk to one of our life insurance specialists for help finding a life insurance policy that meets your needs.
You may know you should review your life insurance at least once a year or whenever you experience a major life event. While milestones like getting married or buying a home are common triggers, many other less obvious events—like getting a promotion or caring for a family member—also signal it’s time for a life insurance checkup. This guide outlines 11 important, though sometimes overlooked, moments when you should reassess your policy.
Providing care for a sick or aging family member often means taking on new financial responsibilities, similar to adding a dependent to your family. According to research from the National Alliance for Caregiving and AARP, 63 million U.S. adults were caregivers in 2025, a role that often involves significant financial support that can impact your savings.
If you become a primary provider for a relative, it’s wise to review your life insurance. Increasing your policy can help cover these added costs and ensure the person under your care is provided for if you’re no longer around.
College is a major expense, extending beyond tuition to include rent, groceries and supplies. It is a critical time to conduct a life insurance review to confirm your policy would cover these costs if something happened to you. If your coverage falls short, you should consider increasing it.
Some policies with a cash value may allow you to withdraw funds to help pay for college expenses. These benefits are generally tax-free and typically don’t affect financial aid eligibility. However, always consult a life insurance specialist to determine the best course of action for your situation.
Learn the basics of life insurance—what it is, how it works and why it’s a vital part of financial planning—with our informative webcast, “Thinking about Life Insurance? We've Got You Covered!”
Watch NowWelcoming a new baby is a well-known reason to review your life insurance, but what about adopting a child—or having a new grandchild? Even if they aren’t your direct dependents, a growing family may inspire you to increase your coverage to leave a larger legacy.
Many grandparents also choose to purchase life insurance policies for their grandchildren as a way to build a foundation for their financial future. These policies are often affordable, can grow in cash value and typically transfer to the child when they turn 21.
Downsizing your home is a significant life event that often reduces your living expenses. This is an ideal moment for an insurance checkup, as you might find that your financial obligations have decreased, potentially allowing you to reduce your life insurance coverage and lower your premiums.
Deciding to leave the workforce to become a stay-at-home parent significantly changes your family’s financial structure. Even though it’s unpaid work, your family now relies on a single income. This is a crucial time for a life insurance review.
It’s important to consider increasing coverage for both the working and non-working parent. If something happens to the income earner, the policy would need to replace that lost salary. Likewise, if something were to happen to the stay-at-home parent, the policy would need to cover new expenses, such as childcare.
Buying a home is a common trigger for a life insurance review, but other large purchases or debts should be treated the same way. Taking on significant new debt means you may need more coverage to ensure your family isn’t burdened.
Consider an insurance checkup if you:
Don’t let life insurance myths prevent you from helping to secure your family’s financial protection. Here, we debunk common misconceptions about life insurance.
Read MoreReceiving an inheritance, especially as a beneficiary of a life insurance policy, provides a moment of financial change. While this money can offer stability during a difficult time, it’s also a signal to conduct a full review of your own finances, including your life insurance policy, to see how your needs have changed.
The death of a designated beneficiary on your policy is a critical, though often overlooked, reason for an immediate life insurance review. If you don’t update your beneficiary, the policy proceeds may not be distributed according to your wishes. To make this change, you will need to contact your life insurance specialist.
A promotion usually comes with a salary increase, which can lead to an elevated lifestyle and higher expenses. After celebrating your achievement, take a moment to review your life insurance. It’s wise to increase your coverage to match your new income level and protect the lifestyle your family will be accustomed to.
If you decide to branch out on your own and open your own business, you need to think about how others might be affected if something happens to you. This would be a good time to add a business partner as a beneficiary and to revisit how much your loved ones would receive.
Your income and expenses will change after you retire, making it an ideal time to review your life insurance policy. Several variables can affect whether your coverage and premium are appropriate in retirement. Among them:
The answers to those and other questions will help you determine whether you need to make any changes.
Major life changes can impact your financial needs and responsibilities. A regular policy review with a life insurance agent can help ensure your coverage remains adequate to protect your loved ones if something should happen to you.
You should review your life insurance policy at least once a year or whenever you experience a significant life event, such as a change in income, family size or major assets. An annual insurance checkup ensures your coverage remains aligned with your current needs.
Yes, you can often decrease your coverage, especially if your financial obligations have been reduced, such as after paying off your mortgage or downsizing your home. A life insurance review with a specialist can help you determine the appropriate level of coverage.
Employer-provided life insurance is a valuable benefit, but it is often not enough to fully protect your family, and coverage typically ends if you leave the job. A personal policy that you own and control is the best way to ensure continuous and adequate protection.
life insurance answers
Talk to one of our life insurance specialists for help finding a life insurance policy that meets your needs.
ALAN-30356-D25-XX
This information is being provided for general informational purposes only. The Auto Club Group does not assume any liability in connection with providing this information.
Life insurance underwritten and annuities offered by AAA Life Insurance Company, Livonia, Michigan. AAA Life Insurance Company is licensed in all states except NY. CA Certificate of Authority #07861. Products and their features may not be available in all states.
AAA Life and its agents do not provide legal, financial, or tax advice. Therefore, you may wish to consult independent professional advice prior to the purchase of any contract.
This is a summary of product provisions and does not contain all of the benefits and exclusions. For complete terms of the insurance coverage or annuity, please contact your agent or refer to the policy/contract.
Annuities - LA
Annuities are not short-term products. During the surrender charge period, withdrawals exceeding 10% will be subject to a surrender charge that may be higher than fees associated with other types of financial products and may reduce principal. Withdrawals prior to 59½ may be subject to IRS penalties, separate from the annuity’s schedule of surrender charges.
EliteGuarantee Deferred Annuity - LAEG Contract Form Series: ICC11-4101/DA-4101 (In OR: ICC11-4101)
Platinum Bonus Annuity - LAPB Contract Form Series: ICC11-4111/DA-4111 (In OR: ICC11-4111)
Guaranteed Income Annuity - LAGI Contract Form Series: ICC14-4120/SPIA-4120 (In OR: ICC14-4120)
The payout amount you will receive is based on your individual circumstances, the options you select at the time of application and your initial premium payment.
For California residents: If you are 65 years of age or older, pursuant to California Insurance Code §789.8(b), we are required to advise you of the following. If you plan on the sale or liquidation of any stock, bond, IRA, certificate of deposit, mutual fund, annuity, or other asset to fund the purchase of this product, please be advised that you may be subject to some or all of the following as a result of the sale or liquidation: Adverse tax consequences; early withdrawal penalties; or other costs and/or penalties. You or your agent may also wish to consult independent legal or financial advice before selling or liquidating any assets and prior to the purchase of any life or annuity products being solicited, offered for sale, or sold.
Term Life Insurance - LT
Premiums are guaranteed. They are level for the premium period and increase annually thereafter. Any sample premiums are examples only and may vary based on your personal health history and underwriting guidelines. The answers provided to the health questions are used to determine eligibility for coverage. Not all applicants will qualify. Product and its features may not be available in all states. Coverage ends at age 95.
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (8% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Traditional Term - LTT Policy Form Series: ICC19-1801/1801 (In OR: ICC19-1801)
Group Direct Term Policy Form Series: GT8200
Individual Direct Term Policy Form Series: ICC16-1501
Universal Life Insurance – LULG
Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
Lifetime Universal Life Insurance - LUL Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
Policy Form Series: ICC19-4701/4701 (In OR: ICC19-4701)
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (7% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Accumulator Universal Life Insurance - LULA Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
Policy Form Series: ICC19-3701/3701 (In OR: ICC19-3701)
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (5% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Whole Life Insurance
Whole Life Insurance (for coverage amounts of $30,000 or more) - LWL Policy Form Series: ICC18-5601/5601 (In OR: ICC18-5601)
Health history, underwriting guidelines and the answers provided to health questions are used to determine approval for coverage. Not all applicants will qualify. Rates may vary.
If insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (8% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Rapid Issue Whole Life Insurance (for coverage amounts of $25,000 or less) - LRIWL Policy Form Series ICC20-7001/7001 (In OR: ICC20-7001)
Responses to the application will be used to determine approval for coverage. Not all applicants will qualify.
This Whole Life policy is referred to as graded benefit whole life insurance. If you suffer a non-accidental death within the first two years of coverage, your beneficiaries will get 100% of the base premiums you paid, plus 35%. After two years, the total amount of your coverage is paid for death due to any cause.
After the first two years of coverage, if insured is diagnosed with a terminal illness that will cause death in 12 mos. or less, up to 50% of the total benefit can be applied for, and used as insured chooses. The remaining benefit payable at death will be reduced by the Accelerated Death Benefit paid and any accrued and unpaid interest (8% annual interest rate applies). Receipt of Accelerated Death Benefits may affect eligibility for public assistance programs and may be taxable. Please consult the appropriate social service agency and seek the advice of tax counsel before applying for these funds. The Accelerated Death Benefit is not available if the terminal illness results from an intentionally self-inflicted injury. This benefit may not be available in all states.
Guaranteed Issue Whole Life Insurance - LGIWL Policy Form Series: ICC16-6301/GWL6301 (In OR: ICC16-6301)
The maximum amount of Guaranteed Issue Whole Life insurance coverage per insured is $25,000.00. Subject to age requirements and policy limit restrictions.
This Guaranteed Issue Whole Life policy is referred to as graded benefit whole life insurance. If you suffer a non-accidental death within the first two years of coverage, your beneficiaries will get 100% of the level monthly premiums you paid, plus 30%. After two years, the total amount of your coverage is paid for death due to any cause.
If you are a California resident 65 years of age or older, we are required to advise you of the following. The sale or liquidation of any stock, bond, IRA, certificate of deposit, mutual fund, annuity, or other asset to fund the purchase of this product may have tax consequences, early withdrawal penalties, or other costs or penalties as a result of the sale or liquidation. You may wish to consult independent legal or financial advice before selling or liquidating any assets and prior to the purchase of any life or annuity products being solicited, offered for sale, or sold.
