Life insurance provides financial compensation to your loved ones after your death. Your policy is not like a slow cooker where you set the timer and walk away, though. You’ll need to reevaluate your policy when six life events occur.
Get Married
When you get married, your spouse depends on your income and contributions to the home. Take a look at your insurance policy. Is the death benefit adequate for your life partner in case something happens to you? Update your policy or purchase a secondary policy, and make your spouse your primary beneficiary of the benefits. You can also purchase a life insurance policy for your spouse as you give him or her peace of mind.
Have a Baby or Become a Primary Caregiver
Add a baby to the family, adopt a child or begin caring for an aging parent, and you now have another dependent who relies on you for support. Life insurance benefits help to pay for expenses associated with dependent care. In addition to ensuring your policy provides adequate financial assistance, consider making your dependent a secondary or contingent beneficiary on your policy.
Buy or Sell a House
Mortgage payments are probably a significant portion of your monthly budget. Could your surviving spouse pay the mortgage and other household expenses without your income? Make sure your life insurance policy covers the mortgage repayment if you die before the house is paid off. If you downsize or repay the mortgage, consider cancelling the policy if you no longer need it.
Incur or Pay Off Significant Debt
Student loans, credit card bills and other significant debts put a damper on your monthly budget. Repaying those expenses could also affect your survivors. Ensure your life insurance policy covers any significant debt repayment as you care for the people you love. Once the debt is repaid, you can decide if you wish to keep or cancel the policy.
Experience Income Changes
Lose a job, switch jobs or get a large raise, and you’ll also want to check your life insurance policy. Make sure it provides adequate resources to replace your income. Ideally, your policy should be at least five-to-10-times your annual salary.
Begin Planning for Retirement
As you begin planning for your future retirement, remember to update your life insurance policy. The benefits can assist your surviving spouse in maintaining his or her current lifestyle, traveling the world or covering nursing and medical care. With it, your spouse has peace of mind and financial security even during the retirement years.
Life insurance provides peace of mind. Regularly evaluate your policy with your insurance agent to ensure it meets your needs.
