Your life insurance policy isn’t something you should just purchase and forget. Get in the habit of reviewing it every couple of years, and more importantly, whenever you experience a life-changing event. Here are major events that should remind you it is time to review a life insurance policy.
Divorce or Marriage
The act of taking your vows or dissolving them means a significant financial change. If you’re getting married, you’ll likely be sharing finances. When you pool your money together and start sharing accounts, it’s also a good idea to make sure your policy adequately covers your husband or wife, should you pass away.
Alternatively, if you’re getting divorced, make sure to update your beneficiaries if you have decided to exclude your ex-spouse. You’ll also want to review your policy to ensure it fits your new, single lifestyle.
Time to Review a Life Insurance Policy Happens After a Home Purchase
If you’re planning to purchase a home and take out a mortgage you’ll probably want to take a look at your policy. A mortgage is a substantial debt, and many mortgage lenders will want to ensure it gets paid even if you pass. If you die before paying off your mortgage, your debt will pass on to your family, and your spouse may not be able to afford to pay for the house on one income. Even if they sell the house, there is no guarantee they will make enough on the sale to cover your mortgage. With all of these factors to consider, it may be time to make an update or change to your policy. Make sure to talk to a financial professional about how buying a home will impact your life insurance needs.
Having a Child or More Dependents
A new addition to your home is another sign that it’s time to examine your policy. You must now care for an additional person-emotionally, physically and financially. It’s important to ensure that your family will be able to support themselves in the immediate aftermath of your death. You’ll also want to help secure their future. Life insurance can help cover many expenses that your spouse may incur for a child when you are gone, from daycare to college.
If you’ve just been offered a new job, received a raise or were promoted, you may want to consider purchasing additional life insurance to better cover your family’s new standard of living. Whether an increase or decrease in household income, the change can have an effect on living standard, and as such should be reflected in your policy.
Death of a Beneficiary
If your main beneficiary passes away, you should revise your policy to reflect this. Say you purchased a policy when you were younger, your parents may be named as beneficiaries, for example. From that time to present, your parents may have passed on. Should that be, it may be time to review a life insurance policy.
Change in Health
If you’ve become healthier through exercise or changed your habits in a way that significantly impacts your health, you could qualify for new life insurance rates. Lowering your blood pressure, giving up cigarettes, or having surgery to reduce weight or rectify medical issues are examples of changes that might alter your policy. Should you experience any of these changes, you may want to explore your options.
Care for Loved Ones
If you provide care for family member, you might want to consider what could happen if you were to pass.
Life insurance can do a lot to assist with potential challenges. Hiring a care provider or moving your loved one to a nursing facility are just two costs that may make you want to review your policy.
Hopefully, you’ve been putting money away for retirement for awhile. But it doesn’t hurt to review and ensure your loved one will have enough if you die after you retire. If it seems that there isn’t enough, you may want to consider additional an life insurance policy. Either way, it’s a good time to review what you already have.
Often, life insurance can fall into the category of out of sight, out of mind; you purchase a policy and call it good. Resist the urge – review your life insurance policy should you experience any of these life events.