If you have life insurance, you’re in good shape. But when major life changes occur, it’s time to review your policy and update it to suit your new situation.
When should you review your life insurance?
Several life events will significantly change your life insurance needs. These include:
- Marry: Once married, your lives merge into one, sharing finances and personal possessions. Your spouse should be listed as the beneficiary of your life insurance policy, and the coverage amount should reflect the purchases you’ve made, such as a mortgage or other bills that will need to be paid in the event of your unexpected death.
- You had a child: If you had children, you want to make sure your child has the best possible future, no matter what happens to you. The cost of raising a child can include the cost of health insurance, education, extracurricular activities, and for children with special needs, additional costs. Make sure your life insurance coverage will pay for everything your child needs in the future.
- A Divorce: After a divorce, many people change the beneficiary of a life insurance policy from the former spouse to a parent, to children or other individuals. You may want to increase your coverage because you no longer have the joint income that a spouse may have provided to the family.
- You opened a business: Starting your own business is exciting and rewarding, but what would happen if you passed away prematurely? Life insurance can be purchased by your company, with the benefits paid to the company to keep it healthy if you unexpectedly pass away.
- You buy a new home: The cost of a mortgage is generally the highest monthly bill. If you̵7;re buying a home, you’ll want to make sure your life insurance policy has a large enough payout to cover the mortgage payment. This allows your spouse or partner to avoid losing the property.
Can I have more than one life insurance policy?
To increase the amount of benefits paid to your loved ones should you suddenly pass away, you can choose to purchase a second or third policy. You can own one, two or more policies, from the same company or from different companies. You may have a whole life policy and choose to add a term life policy to ensure that your loved ones are safe from serious financial and tax issues in the event of a sudden death. Insurance companies will set a limit on the amount, which is usually around 20 to 30 times your annual income.
How often should I review my life insurance policy?
Once you buy life insurance, you may not think about it, but simply pay the premiums like a regular monthly bill. You may not realize that you should review your policy once a year. You may be paying more than you need to and can purchase a policy at a lower premium with more coverage, or you may gain more financial stability by converting your policy to whole life, or it may be time to add another policy.
Take advantage of the support of a local agent to schedule an annual review of your life insurance policy to ensure you have the coverage you need to protect the people you love.