As your life changes, your insurance should change with it. Anyone can, and should, benefit from a life insurance policy review a minimum of every three to five years. Even if it's been less time than that, though, you should consider reviewing your coverage if you've had a life changing event. Here are five common examples.
1. You’ve had a child. The cost of raising a child through age 17 is $233,610, according to 2015 data from the U.S. Department of Agriculture—and that’s not even mentioning college costs if you plan to help out.
If you’ve recently had an addition to your family, your spouse or partner may not be able to afford those costs if something were to happen to you. That’s especially the case if you’re the financial breadwinner.
2. You’ve bought a new home. Two of the top five reasons people get life insurance is to cover mortgage debt and to pay for home expenses, according to the 2018 Insurance Barometer Study by Life Happens and LIMRA.
If you have a family, the last thing you want is for them to be forced out of their home because they can’t keep up with the payments. So, if you just bought your first home or a new home with a bigger mortgage, make sure you have enough coverage to at least make the monthly payments.
3. Your income has increased dramatically. Two-thirds of people who own life insurance bought it to replace lost income if they were to pass away, according to the same Barometer Study. If you’ve recently gotten a significant raise or your income has increased steadily since you last bought insurance, check to make sure your insurance coverage is still enough to replace it.
4. Your lifestyle has changed. While income increases often come with lifestyle changes, it’s also possible to get a lifestyle upgrade after you’ve paid off debt or improved your cash flow in some other way. If you notice that you’ve been spending more per month than you were a year or two ago, your current life insurance policy may leave a gap between its coverage and your loved ones’ needs.
5. You’re thinking about your estate planning. Another top-five reason people get life insurance is to transfer wealth or leave an inheritance. As you get older, you may start thinking more about what kind of legacy you want to leave behind.
If you’ve been focused on other life insurance needs up to this point, it might be time to take another look to see if you would owe any estate taxes upon your death or what other expenses your estate might incur. You may also consider whether you want to leave any money behind for your children or a favorite charity.
If one of these things has happened to you and you’re not sure if you need to increase your coverage, use our comprehensive life insurance calculator to see how your needs have changed.
In most cases, you won’t be able to increase the coverage on your current policy. Instead, you’ll buy a new one to supplement the first. You can do this by reaching out to your insurance professional or shopping around to see if another insurer might offer you a better deal. If you contact us, we can put you in touch with a qualified insurance professional.
Whatever you do, take the time every once in a while to determine whether your life insurance coverage is still enough to take care of the people you love.