All too often, people buy a life insurance policy, stuff it in a drawer, and forget about it. While theres no question that having coverage in the first place is the responsible thing to do, its important to remember that your life insurance needs hardly remain static. Thats why its a good idea to review your current life insurance policy once every five years. If one or more of the following 10 milestones have occurred since you initially bought your policy, it may be time for you to increase – or decrease – your coverage.
- Youve gotten married, divorced or been widowed. If youve just gotten married, the best wedding present you can give yourself (and your partner) is more coverage – especially if one of you is financially supporting the other. If youve recently divorced or been widowed, you may want to reduce your coverage amount – especially if you dont have children or other dependents.
- Youve had a child (or adopted one). Having another mouth to feed is as good a reason as any to get more life insurance. Your children will need as much financial support as possible in the event that something happens to you – especially if youre planning on sending them to college.
- Youre approaching the age of retirement. Getting ready to retire? Chances are you wont need as much coverage. Your children are probably grown and supporting themselves, and you wont need as much income replacement since youll no longer be working full-time.
- Your children are leaving for college. If your kids are leaving for college, theyve reached the age of adulthood – which means its only a matter of time before you no longer have to support them financially. Thats why this is usually a good time to reduce your coverage amount – provided that youve already saved enough for their college tuition.
- Your children have gotten married. If your kids are getting married, its unlikely that theyre still depending on you for financial support – which means you probably dont need as much coverage as you once did.
- Your partner, child or a dependent have suffered a serious illness or disability. Should a serious accident or disease befall your spouse, child or another dependent, its time to get more life insurance. Especially if youre their sole means of financial support. Should something happen to you, youll want to make sure they can continue to get the care and medical attention they need.
- Youve moved into a larger or more expensive home. Whether youve upgraded from an apartment or condo to a house or simply moved into a larger or more expensive home, nows the time to increase your coverage amount. Bigger homes mean bigger expenses – especially for anyone you might leave behind.
- Youre caring for an aging parent. In many ways, caring for an aging parent is like caring for a child. So even if youre single and dont have any children, youll need enough life insurance to ensure that your aging parent will be cared for in the event that something happens to you.
- You or your partner has changed jobs (or had a substantial change in income). Given that life insurance often serves as replacement income, you should have enough to cover your salary for as many years as your dependents will be in need of your paycheck. If youve recently switched to a higher-paying job or gotten a raise, it may be time to increase your coverage accordingly.
- Youve started a new business. If youve just started a new business, you may have several employees whose livelihood now depends on you. Increasing your life insurance coverage is a great way to ensure that your employees as well as your family will be taken care of if tragedy strikes. You may even want to take out a key person insurance policy if your role is crucial to your companys future, or would be difficult to fill in your absence.
If you think you need to change your coverage strategy, speak to your life insurance agent as soon as possible. He or she can help determine whether you need more or less coverage based on your present lifestyle and circumstances.