Even if your life insurance policy is a great fit when you buy it, that doesn’t mean it will always meet the needs of you and your family. It’s smart to re-examine your coverage every few years to make sure you have the right amount. And sometimes life circumstances will dictate re-evaluating your life insurance policy.
Getting married, buying your first home or having a baby are good times to boost your coverage or buy a policy if you don’t have one already. Many people also change or drop their policies once they retire. There are other times, however, when you may not think about reassessing your life insurance – but you should.
You got a promotion or a new job
Most people buy life insurance so that their families have a way to replace their income if they die. So it follows that when your income increases – say, you get a new, higher-paying job or a promotion – you should have more life insurance, especially if you have taken on more expenses.
If you’ve lost your job and can’t afford the premium payments, talk to your agent. If you have a permanent life insurance policy, your agent may be able to help you find ways to make your life insurance work for you, such as policy loans.
You’ve lost a spouse or gotten divorced
Whether you are widowed or you’re newly single due to divorce, you should take a look at your life insurance policy.
If your husband or wife has died, making you the sole breadwinner, you may need to increase your coverage. On the other hand, if you don’t have children, you may be able to drop your policy altogether.
Likewise, getting divorced could make your coverage needs go up or down. Maybe you’re taking on more responsibility for your children’s college funds, which means you need more coverage, or maybe you’ve sold your home and moved to an apartment and will no longer need to take mortgage payments into account. Before making changes, make sure that you’re complying with the terms of your divorce settlement.
Either way, you’ll want to avoid mistakes when designating life insurance beneficiaries.
Your health has changed for the better
Most life insurance companies expect your health to decline over the course of your policy. But in some cases, you may be in better health now than when you applied for coverage. If you’ve lost a large amount of weight or found a better way to manage a chronic condition, you could qualify for better rates.
Life insurance companies offer the option to go through another medical exam, or what’s called “re-rating.” If your health has improved substantially since your policy was issued, you could get a lower rate. It may also be worth shopping around for a new policy to see if you can beat your current company’s premium.
No matter your life change, your insurance policies – including your life insurance – should fit your circumstances. So when things change, you’ll want to review your policies to make sure they’re still offering the best protection.
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