Just had kids or have they recently left the nest? Here's why you need to review your life insurance policy.
If you've had the same life insurance policy for a while, chances are that your needs have radically changed. Whether you've gotten married, had kids or your kids have left the nest, it's important that your life insurance policy reflect your current needs.
This is why it's advisable you review your life insurance regularly. If you aren't sure what your next step is, you can always ask for help from a life insurance adviser.
When should I review my life insurance policy?
- You're in a new relationship. One possible reason to review and adjust your life insurance plan would be changes in relationship. For example, while you may have been single when you took your policy, you may now be living with a partner or even married. Conversely, you may have been married and are now divorced or with a different partner. It's important that you not only evaluate the level of cover you have but also update your policy include or remove beneficiaries.
- Birth of child. You may have taken out your life insurance when you had no kids or fewer children than you have now. The addition of a child to a family can make a huge difference to the family finances. The additional mouth to feed should be reflected in the amount fo cover you have.
- A rise in the number of financial commitments you have. Since you took out your life insurance plan, you may have taken on more financial commitments, such as a mortgage or a car loan. With these increased debts to deal with, your family could be left with nowhere near enough benefit to cover necessary costs and commitments in the event of your death unless you make changes to your life insurance accordingly so that the level of coverage is adequate and takes into consideration these increased financial commitments.
- An increase in income levels. The amount of income you are bringing in may have changed significantly since the time you took out your life insurance plan initially. This means that you will most likely have become used to living on a higher income, have become used to a different lifestyle, and may have taken on increased financial commitments in line with your higher income levels. This means that you would need to consider altering your level of coverage.
- Repayment of debts. Your insurance needs will decrease as when your debts are repaid and there will be less financial commitments to meet in the future.
- Changes to the beneficiary. You may find yourself in a situation where the main beneficiary of your life insurance benefit has actually passed away, which means that you will have to make alterations and name someone else as the beneficiary. Another scenario is that the main beneficiary is no longer a part of your life, such as in a relationship breakdown, in which case you would again need to look at making changes so that the benefit goes to the person you want it to go to.