When to review a life insurance policyWednesday 19 August 2020 | Reading Time: 4 minutes
Your life insurance policy can offer assurance and stability for your family should you pass away. But that policy needs to be revised and updated from time to time, especially when a life-changing experience occurs. Review your policy if one of the following events occurs.
Having a child
Having kids is a lot of responsibility. To ensure you’re looking after your children when you’re gone, consider purchasing a life insurance policy that will protect them until they are adults. Life insurance can help cover many expenses that your spouse may incur when you are gone, like daycare services to help look after your child. It can also assist your loved one with chores, like cooking and cleaning that he or she may not have time to do.
Getting married or divorced
If you’re getting married, you’ll likely share finances with your betrothed. If you pass away, your spouse may suffer a financial burden. It’s a good idea to look at your life insurance and make sure the policy adequately covers your husband or wife. A term life insurance policy, for example, is an option that covers the policyholder for a specific amount of time, typically from 10 to 30 years. A plan like this could help provide sufficient income to your spouse in the event of your sudden death.
If you’re getting divorced, make sure to update your beneficiaries so your ex-spouse doesn’t receive your money when you pass away. You’ll also want to review your policy to help ensure it fits your new, single lifestyle.
Purchasing a home
A home mortgage is a substantial debt, and many mortgage lenders will want to ensure it gets paid even if you die. In other words, they may require life insurance. Even if your lender doesn’t require coverage, consider taking out a policy to protect your family. If you pass away, your debt will pass on to them, and your spouse may not be able to afford to pay for the house on one income. If you want to ensure your family can stay in the house, it’s important to make sure the bills can be paid after you’re gone. Even if they sell the house, there is no guarantee they will make enough on the sale to cover your mortgage. They will also have to cover the monthly payment until the sale is final. Make sure to talk to a financial professional about how buying a home will impact your life insurance needs.
Planning for retirement
It’s a smart move to assess your finances and ensure that your loved one will have enough income if you die after you retire. If the answer is no, you may want to consider supplementing that income with an additional life insurance policy.
Channing your beneficiary
If your main beneficiary passes away, you should revise your policy to change your beneficiary designation. If you purchased a policy when you were younger, your parents may be named as beneficiaries, for example. If they have passed on, it’s time to make an update.
Making a job change
If you’ve just been offered a new job or received a raise or promotion, you may want to consider purchasing additional life insurance to better cover your family’s upgraded standard of living. A new job may offer a different life insurance plan than what you had before, so make sure to investigate the new job benefits, and re-evaluate your life insurance.
Providing care for loved ones
If you find yourself providing care for an older or handicapped family member, you’ll need to think about what might happen to that person if you aren’t around to help. Life insurance can do a lot to assist with potential challenges, such as hiring a care provider, moving your loved one to a nursing facility, or providing a cushion for another family member to provide care in your place.
Lowering your blood pressure, giving up cigarettes, or having surgery to reduce weight or rectify medical issues, are life changes that could help lower your life insurance rates. If you’ve become healthier through exercise or you’ve changed your habits in a way that significantly impacts your health, make sure to review your policy periodically so the coverage reflects your current health and lifestyle.