The amount of life insurance that you need depends on where you are in your life. While theres no question that having life insurance in the first place is the responsible thing to do for you and your family, its important to remember that the longer you live, the more your life insurance needs change. Reviewing your policy once every five years is a great way to ensure that your life insurance is keeping up with you. If one or more of the following five milestones have occurred since you initially bought your policy, it may be time for you to change your coverage amount.
- Youve married, divorced or been widowed. Just married? Congratulations! Now you have a spouse to consider. And kids, if you plan on having any. Better get a policy if you dont have one already – or increase your coverage if you do. Divorced or widowed? Since your spouse is no longer in the picture, you may not require as much coverage.
- Youve just had a child (or adopted one). The larger your family, the more coverage youll require. For every child you have or adopt, youll want to make sure you have enough to cover their everyday needs until they turn 18. And if you plan on sending them to college or grad school, youll need even more.
- Youve bought a home (or upgraded to a substantially larger or more expensive one). Being a homeowner means greater financial responsibility. Mortgage payments on a home tend to be higher than mortgage payments on an apartment or condo, so an upgrade in housing should also warrant an upgrade in life insurance coverage. Will the policy you have enable your family to keep the house if something happened to you? If the answer is no, then you need more coverage.
- Your children have left the nest. When your children have all graduated from college and are on their own, your day-to-day expenses tend to diminish considerably – which is why this is usually a good time to reduce your coverage amount. Just make sure your policy is sufficient to protect your spouse and cover any estate taxes that your adult children may face when youre no longer around.
- Youre approaching the age of retirement. If you purchased a term life insurance policy in your thirties or forties, chances are that your term period will be ending around the time you decide to retire. If your retirement funds are ample and your children are no longer dependent on your income, then you may not need to purchase another policy. But if you anticipate having to work full- or part-time after your 65th birthday, youll want to make sure you have enough coverage to replace your income when youre no longer able to support your spouse and any other dependents you might have.
Whether youre thinking about purchasing life insurance for the first time or changing the coverage amount on an existing policy, its always a good idea to consult an insurance professional first. A licensed agent can help you determine how much coverage you need, and help you get your best possible rate.