No need to feel guilty. After all, it's human nature not to dwell on our own mortality, and there's certainly an implication of that in any discussion of insurance, especially life insurance.

You don't have to feel guilty, but you do have to take some steps to make sure your insurance coverage still meets your needs--both personal and business. It's quite possible that your needs have changed in the years since you purchased the policies, and the longer that period of time, the more likely it is you'll have to take some action.

Reviewing your insurance coverage should be a regular part of your financial housekeeping chores, but it doesn't have to be a particularly difficult or time-consuming task if you break it down into four simple areas. Ask yourself the following the questions:

• Do I have the right amount of coverage?
• Do I have the right types of policies?
• Am I paying the right price?

In a nutshell, the personal life insurance coverage you need equals the amount of money your family will require to meet all living expenses after your death, minus any continuing income or assets that can be used for that purpose. If you are in business with a partner, you may also have partnership insurance designed to pay your survivors fair market value for your share of the business and pass sole ownership of the business to the surviving partner in the event of one partner's death.

Typically, your calculations for life insurance coverage should encompass normal living expenses (mortgage or rent, health care, food, clothing, taxes, etc.) over the life expectancy of your spouse and your children's expenses (including education) through completion of college. Subtract from that the expected earnings of a working spouse, Social Security survivor's insurance, any pension benefits your spouse might receive and any assets you have designated for this purpose.

If your family or income--or both--have grown since you originally purchased your policy, the figure you come up with may be quite high. An upper middleclass business owner in his or her late 30s to late 40s with a spouse of similar age and a couple of kids could be looking at a figure between $1 million and $2 million.

The worst thing you can do is panic and do nothing. The prospect of filling a million-dollar insurance gap may simply not be realistic given your current circumstances, but it is important that you take some action. Start by scaling back your projections. For example, use a smaller number when calculating your spouse's life expectancy and figure on your children taking out student loans, qualifying for some financial aid and maybe working part-time to help finance their college educations.

OVER-INSURED?

Conversely, if you bought your insurance at a time in life when your responsibilities were greatest, you may now be overinsured. This could be the perfect opportunity to convert superfluous insurance coverage into assets that can be invested in other areas--perhaps growth of your business.

Your partnership policy, if you have one, needs the same kind of periodic review. Has the value your business changed since you first bought the policy? Do the terms of the policy still provide the protection you want?

Having the right kind of insurance is also important. Basically, there are three types of life insurance policies--term, whole and universal--although there are countless variations on the theme within each of those categories.

Term insurance is generally cheapest. A rough rule of thumb is that a term policy's annual premiums will be about one-tenth those of a whole life policy for the same amount of coverage. So why would anyone even consider whole life? More on that later.

The two common types of term insurance are annually renewable and level premium. With the first, you renew your policy every year and the premium increases as you age. With the second, you are guaranteed the same premium through the life of the policy--anywhere from five to 20 years, most commonly. Each has its advantages.

Annually renewable term has the lowest rates in the early years of the policy. A level premium policy will have higher rates than an annually renewable policy in the early years, but its unchanging cost can be important in doing financial planning.

Whole life insurance is much more expensive than term, but it offers level premiums, provides coverage and builds cash value within the policy. Many whole life policies are structured so the dividends they generate are enough to cover the premiums after a certain period of time (usually 10 to 15 years) if the policy holder chooses.

Term policies do not build cash value. If you outlive your coverage, there is no payback on your invested premiums. (Talk about a Hobson's choice!) That is why many insurance advisors recommend a combination of term and whole life policies.

Universal life (also called variable life) is a hybrid form of whole life. Such policies generally allow you to vary your premium payments from year to year and offer a selection of investment options (similar to stock and bond mutual funds) for the cash value built by the policy.

One advantage of whole life and universal life policies is that they allow tax-deferred accrual of cash value over the life of the policy. The potential for growth is generally greater in a universal policy, since it offers a wider range of investment options. Both types of policies also allow you to borrow against their cash value.

RATING INSURERS

Life insurance companies are commonly considered to be among the most rock-solid of financial institutions, and that is generally true. Regulated by both state and federal watchdogs, they are required to maintain certain levels of financial reserves to guarantee their ability to make good on claims. Still, more than 200 insurance companies have failed over the past decade, including a couple of high-profile insolvencies in the early 1990s.

That being the case, your regular insurance checkup should include taking a look at the financial health of your carriers. That's actually pretty easy to do. At least five agencies--A.M. Best, Duff & Phelps, Moody's, Standard & Poor's and Weiss Research--compile ratings on some or all insurance companies. The ratings process is complex, but it is designed to answer one simple question: Will this company be able to meet its policyholders' claims?

A.M. Best & Co. is the best known of the insurance company rating agencies. Many large libraries keep Best's directories on hand, and the company offers a pay-per-call telephone service (1-900-555-2378; $2.95 per call plus $4.95 for each rating provided).

Figuring out if you're paying the right price gets tricky. The best time to shop for price on a level term policy is at the outset. The reason is that if you decide to change carriers later on, you'll be starting the new policy in a higher age bracket; so you'll be looking at higher premiums from all carriers.

It does pay to shop around, however, since prices can vary dramatically. In a survey conducted by Consumer Reports three years ago, annual premiums on a 10-year level premium term policy of $250,000 for a 45 year-old male nonsmoker ranged from a low of $565 to a high of $1,228. And there was little correlation between premiums charged and companies' financial strength ratings from sources such as A.M. Best.

With annually renewable term policies, there is more leeway for price shopping. Since the premium increases based on age each year anyway, there is ample opportunity to compare your current carrier's offering with those of its competitors.

It's when you get into the area of whole life and universal life policies that things can get really complicated. Here's why. Insurers use projections based on current and anticipated interest rates to calculate how quickly the cash value of a policy will grow and how soon it will become self-sustaining (i.e., pay its own premiums from earnings). Insurers tend to be optimistic about what future interest rates will be, and that is especially true for policies issued during periods when interest rates are high, such, as the early 1980s.

If you bought a whole life or universal life policy with the expectation that it would begin paying for itself at a certain point and would provide you with coverage to a specific age, it is imperative that you take a close look at that policy on a regular basis.

Sometimes the information you need is contained in your policy's annual statements. If you can't find it or don't understand it, you can ask your insurer for an "inforce" illustration. If it turns out that your coverage will not last as long as you expected or will not become self-sustaining at the point you expected, you must take some action.

Your options boil down to increasing the premiums you currently pay, paying the same premiums for a longer period of time, cutting the amount of the death benefit or buying supplemental insurance to cover the shortfall. Changing companies is another option, but whole life and universal policies often carry steep surrender charges that can sap the cash value you have built up in the policy.

Finally, don't overlook your business insurance when you are conducting this periodic review. As Sean Mooney, an economist and senior vice president with the Insurance Information Institute, puts it, "Business owners are natural risk takers. They have to be, considering all the things that can go wrong with a business, particularly when it's pulling out of its initial stage and trying for the next plateau of growth."

That being the case, business insurance is critical to providing entrepreneurs with the peace of mind they need to stay focused on their ventures. There are several different types of business insurance, and the coverage you need is determined in large part by the type of business you operate.

BASIC COVERAGE

Property insurance is a very basic type of business coverage. Virtually every business owns some property, and many have substantial property assets, Mooney points out in his book, "Insuring Your Business." Since all types of property are subject to loss due to forces such as crime, fire, etc., it is important that business owners protect their investment in this area.

A basic property insurance policy covers losses caused by fire or lightning and the cost of removing properly to protect it from losses associated with those events. Business owners can increase their protection by choosing a policy that offers extended coverage against other perils, such as damage to a building from the weight of snow, ice or rain; water damage from plumbing problems; or even building collapse.

The other basic type of business coverage is liability insurance, which protects the company's assets if it is sued for causing injury or property damage to another party. This type of policy generally covers the payment of damages and penalties related to those damages, as well as attorneys' fees and other expenses related to defending the business against a claim. This type of coverage is known as a commercial general liability (CGL) insurance policy.

Small business owners can usually purchase combined property and CGL coverage in a package format called a business owners policy--BOP, for short. Your eligibility for BOP is determined by the size and type of your business, the extent of the liability coverage required and the scope of its off-premises activities. BOP insurance is generally cheaper than equivalent coverage provided by separate property and CGL policies.

Reviewing insurance coverage may never make it onto your "favorite things to do" list, but it is an important task that every business owner should perform. The immediate reward is increased peace of mind, and that can help you do a better job of staying focused on your primary goal of growing your business. Combining property and CGL insurance in one policy can save money.