Life insurance needs to change as you go through different life stages. This is why when you reach a significant life event, or your family situation changes, it’s a good time to think about adjusting your life insurance policy.
Getting Married:
When two people begin a new life together, they often want to make sure their spouse will be taken care of if something tragic happens. If you had life insurance when you were single, it might have only covered your funeral costs. But now, with a partner to consider, it could be time to update your policy to support your spouse financially if you pass away.
Buying a Home:
Purchasing a home usually means committing to a mortgage for years. If you’re responsible for the mortgage, you’ll likely want to adjust your life insurance to cover that debt if you’re not there, relieving your family of that financial obligation.
Becoming a Parent:
When you become a parent, your focus shifts. Now, you have another person to include in your plans—including your life insurance coverage.
Starting Over:
Life events like losing a spouse through death or divorce, getting remarried and blending families, and other fresh starts may all require changing your life insurance policy.
What Should Change?
When your financial responsibilities shift due to different life events, it’s a good idea to review your life insurance policy details to ensure they still meet your coverage needs. If your family situation or requirements have changed, think about making changes to these parts of your life insurance policy.
Beneficiary:
The person who will get the life insurance payout if you pass away might need to be updated based on your current family situation. For example, if you’re getting married, you might want to add your new spouse as the beneficiary. Conversely, if you’re getting divorced, you might want to remove your ex-spouse.
Type of Coverage:
If you have term life insurance, which only lasts for a specific time, like 20 years, you might realize you need coverage even after that term is up. For instance, if your term was set to end when you turn 50, but you’ve remarried and now have young stepchildren in your forties, you could think about switching to a longer-term policy or permanent life insurance.
Benefit Amount:
Family situations change over time, so there might be situations where you should update the amount of money your life insurance policy would pay out. For instance, if you’re supporting a spouse who doesn’t work and has three children, you likely need a larger benefit compared to if both you and your spouse work and you have no children.