If you are young and single with no dependents, you probably may not need to think about life insurance right now. One exception would be if you don’t have enough saved to pay for your funeral expenses and you want to prevent your family from having to bear that burden. However, as your life changes, your need for life insurance also changes.
These are a few common life events that affect your life insurance coverage needs. If you have experienced one of these events and haven’t taken the time to reassess your insurance coverage, you should contact an agent as soon as possible to ensure you have adequate protection.
- Getting Married: When you die, will your spouse be able to cover your funeral expenses, pay estate taxes, and pay off your debts? These expenses can cost tens of thousands. Also, will they be able to support themselves? If your spouse depends on you to help pay rent and take care of expenses, they will be impacted by your death. For that reason, it’s important for you to meet with your agent and talk about life insurance options when you get married.
- Buying a Home: When you take on a mortgage loan, you’re adding a big expense that you and your spouse must manage every month. This likely means that your income is essential to your spouse’s livelihood, in which case you should have enough life insurance to cover your mortgage payments if you die.
- Having Children: Food, clothing, schooling, medical care, and much more go into caring for a child. If you died, your spouse would have to take care of all of those expenses by themselves. Even if you are a single parent, a guardian would be responsible for these expenses.
- Getting Divorced: If you get divorced, you may want to promptly change your policy to remove your ex from the beneficiary designation. If you are going to depend on child support or alimony payments from your ex-spouse, you may want to consider including a stipulation in your divorce settlement that requires your ex to purchase a life insurance policy that would replace those payments if they die.
- Employment Changes: Getting a new job or getting a raise at your current job increases your income. Your family may quickly become accustomed to and rely on that new income. If you are making significantly more money than you were when you first selected your policy, it’s time to meet with your agent and discuss the possibility of increasing coverage.
- Paying Off Your Home: When you’re done making mortgage payments, your family’s living expenses decrease by this amount. This might be a time to think about reducing your life insurance coverage, though you should talk it over with a professional to ensure you aren’t giving up too much of your protection.
- Retiring: Many life changes tend to come with retirement. Many people have fewer financial obligations during retirement. If you had a term policy that is coming to an end, you may consider letting it expire if you believe you no longer need coverage. However, you may want to convert your policy into a permanent policy, which can continue to provide a death benefit for your beneficiaries and even offer a savings component that you could access for income, via policy loans and withdrawals.
As your family and financial circumstances change, your insurance needs change as well. That’s why it is important to meet with your insurance agent on a regular basis to ensure you always have adequate coverage. Absolute Retirement Solutions is an independent life insurance agency that focuses on finding personalized solutions for our customers’ insurance needs. Contact us today to find out if your policy aligns with your unique needs.
Policy loans and withdrawals will reduce available cash values and death benefits,
and may cause the policy to lapse or affect any guarantees against lapse. Additional premium payments may be required to keep the policy in force.