Marriage, buying a house, the arrival of a new baby... these are events that change the very fabric of our lives. It’s important at times like these to make sure you have the proper amount of financial protection in place, including life insurance.
This doesn’t have to be a difficult task. In fact, just taking a few minutes to use this online Life Insurance Needs Calculator can help set you on the path. The calculator can give you a working idea of much life insurance you may need.
You might find that you’re still adequately insured. However, if your life change involves new responsibilities for the financial well-being of someone else, chances are you’ll need to increase your coverage.
If you have some coverage, you’re probably wondering: Does it make sense to get another policy to add on to what I already have, or should I get a new policy for a larger amount? The answer will depend on a number of things.
If you’re talking about individual life insurance that you already own, then factors such as your current health and how much your premium payment is (for the amount and type of coverage you have) will come into play.
If you’re in good health and your current, smaller policy is, say, 10 years old, it may make sense to explore “trading up” to a new, larger policy instead of adding a new policy. Rates for term insurance are, in many cases, cheaper now than they were a decade ago, allowing you to get more coverage at an affordable rate. Keep in mind, however, that if you’re getting a new policy to replace the old, you will need to keep the old one in force until your new coverage takes over.
But what if your only coverage is the group life insurance you have through work? This is a nice benefit, but if your new financial responsibilities are ongoing (such as raising a child) it makes sense to complement that coverage with a new, individually owned policy. Here’s why.
If you leave your job or your employer decides to do away with its life insurance benefit, you could be left with nothing. In addition, life insurance through work is often equal to one to two times your salary. While that may sound like a lot, remember that your spouse or family may need this money for years to come. An individual policy means that you can determine the coverage you need, when it’s needed.
This may sound complicated, but it doesn’t have to be. Sitting down with a life insurance professional is a smart move. It won’t cost you anything, and the agent can help you analyze what you currently have (or don’t have) and how to choose the right amount and type of policy for your new life.
As your life progresses, converting your life insurance policy is something that you may consider.
Make sure your life insurance coverage matches your family's needs.