LIFE INSURANCE 101: 6 Times To Re-Think Your Life Insurance

Setting up life insurance is a cornerstone of many financial plans. But enrolling in that coverage isn’t a one-time decision.

As you move through the many stages of your life, your life insurance needs will continue changing. Here are some reasons to re-evaluate your coverage as you move through your life and career.

Are you combining households through marriage or domestic partnership?
One truly considerate thing to do for that special person in your life is to make sure he or she will be able to cover your final expenses, pay off debts, and meet ongoing living expenses in the event of your death. For that matter, you would want to be able to do the same in the event of his or her death.

Are you buying a home? Upgrading to a larger home?
It’s important to ask yourself whether your spouse/partner would be able to make the monthly payments without your income. What about the day-to-day things you do around the home? Would she/he have the time to do them? Or would they need to pay someone else to help out?

Are you adding children into your life?
It doesn’t matter whether you’re starting a family of your own, adopting, or merging two households that already have children. Caring for a new child is a major consideration in the amount of life insurance you should have. According to the USDA, raising a child born in 2012 through age 17 is expected to cost over $241,000 on average* — NOT including the cost of a college education.

Are your children approaching their college years?
Congratulations! You’ve made it a long way – but the money needs aren’t over yet. Could your children attend the college of their dreams without your income to help pay tuition, room and board, books, and all the other costs involved in going to college?

Are you getting close to retirement?
Many say that you’ll need less insurance when you retire. But that rule of thumb doesn’t always hold true. After all, many find themselves taking on a mortgage for a new retirement home closer to the grandchildren … or even spending more than they may have anticipated to “downsize” to a ranch-style home with nicer amenities.

Whether you’re in the last few years of your career or edging into retirement, it’s important to ask yourself whether your spouse/partner could still afford the retirement you both dreamed of if you suddenly passed away.

Has it been years since you reviewed your insurance coverage?
Inflation erodes buying power over time. So if it’s been quite a few years since you purchased your coverage, the payout in today’s dollars probably won’t go as far as you intended. Of course, everyone’s needs are unique to their situation but many insurance professional recommend a benefit amount of five to seven times your salary.

Another thing to consider is whether your current circumstances may warrant a different type of coverage. Different situations are more suited to permanent insurance versus term insurance.