To make certain you have the right type and amount of life insurance, begin by understanding that reviewing your coverage and policies is integral to how you plan your finances, and that not doing so can be costly. There are ongoing financial planning reasons behind scheduling periodic reviews, perhaps the most important of which is to make sure that your coverage is consistent with your individual circumstances and objectives.

The recent decline in the global asset values over the last decade and the constantly changing estate tax laws make these types of reviews even more important. For example, the Tax Relief Act of 2001 gradually increased the estate tax exclusions from $675,000 to $5 million. Then, the Tax Relief Act of 2010 extended the $5 million exclusion through January 1, 2013, and added portability, a provision that allowed any unused portion to pass to a surviving spouse in addition to his or her own $5 million.

We expect that before January 1, 2013 Congress will reduce the estate exclusion from the current $5 million to a level somewhere between $1 million and $3.5 million and will leave portability between spouses intact. Given these facts, a review of your policies may determine that you are over- or underinsured. If you are over-insured, you may have the opportunity to reduce your coverage and save on premiums or rename a charity as a beneficiary. If you are under-insured, you may be exposed to additional risks that require you to increase your policy’s coverage.

So, clearly, regular reviews of your life insurance can affect your financial planning, and once you make these reviews standard procedure, there are questions you should ask about your policy:

Is the coverage the right amount? This depends on a myriad of factors, from how many children you have and how much you earn, to the size of your estate and your liabilities. All these factors will change over your lifetime, necessitating a regular review of your insurance coverage.

Is the ownership of the policy correct? Ownership of a policy is one of the most important factors when dealing with life insurance. Life insurance proceeds are included in the estate of the owner. If you have insurance in place for estate planning, owning it in your own name is counter-productive. The best course is to name as owner an Irrevocable Life Insurance Trust. An insurance review can determine if this move is structured properly. If not, a mistake could be costly. Additionally, it is the owner of the policy that controls the beneficiaries, so if you do not want a particular individual (i.e., a second spouse) to determine how the proceeds of your insurance will be distributed, make sure that person is not the owner of a policy that is based on your life.

Are the beneficiaries consistent with my goals? Ask yourself, “If I bought the policy today, would I choose the same beneficiaries?” Often, our circumstances change, such as a divorce, a second marriage or the buyout of a business partner. Not changing the beneficiaries on our policy as circumstances change can have unintended results.

Clearly, many variables require consideration when making certain you have the right type and amount of life insurance. But two things are unchangeable: One, you need to review your policy regularly. Two, if your life changes, your life insurance needs to change.