If you have life insurance, you are in good shape. However, when major life changes occur, it is time to review your policy and update it to suit your new situation.
When to Review Your Life Insurance?
Several life events will significantly change your life insurance needs. These include:
- Getting married: Once you are married, your lives are merged into one, sharing finances and personal possessions. Your spouse should be named as beneficiary of your life insurance policy, and the amount of coverage should reflect the purchases you have made, such as a mortgage or other bills that will need to be paid should you die unexpectedly.
- You had a baby: If you had a baby, you want to ensure 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, recreational activities, and for children with special needs, added costs. Ensure 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 as you no longer have the shared income a spouse may have provided to the family.
- You opened a business: Opening your own business is exciting and rewarding, but what would happen if you passed away prematurely? A life insurance policy can be purchased by your business, with the benefits paid to the business to keep it healthy if you unexpectedly pass away.
- You are buying a new home: The cost of a mortgage is generally the highest monthly bill. If you are purchasing a home, you want to ensure your life insurance policy has a large enough payout to cover paying off the property mortgage. 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 the benefits paid to your loved ones if you should suddenly pass away, you may 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 your loved ones are safe from serious financial and tax trouble in the event of a sudden death. Insurance companies will set a limit on the amount, which is typically at about 20 to 30 times of your yearly earnings.
How Often Should I Review My Life Insurance?
Once you have purchased life insurance, you may not think about it, but simply pay the premiums as a regular monthly bill. You may not realize that you should have your policy reviewed once a year. You may be paying more than you need to and could 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 a yearly review of your life insurance policy to ensure you have the coverage you need to protect the people you love.