“How’s it going?” your friend asks.
“Ah, same ol’, same ol’,” you reply.
That’s what it may feel like to you, but when it comes to our lives change is constant. A lot can change in a year. A new job—or the loss of one; a new baby—or your last child leaving the house; your first home—or a bigger one; a spouse who is no longer working—or who now has a job…
How these changes impact your monthly balance sheet may be clear. A spouse that is now working means more disposable income. A bigger home means more money going toward mortgage payments. What may not be clear is how it affects your life insurance needs.
That’s why an annual review of your life insurance coverage (and your other insurance coverage, as well) is very important. Life insurance is there to protect your loved ones if something were to happen to you. They need to be OK financially if they could no longer rely on your income, or count on your talents to keep your family and household running, if you are a stay-at-home parent.
Your insurance agent or advisor will sit down with you, at no cost, and help you go through your life insurance coverage amounts and also make sure your beneficiaries are up to date. There will be one of three outcomes:
This may be the case if you now have more or new responsibilities—with financial repercussions—such as a new baby or a bigger home. You’ll also want to make sure you have adequate coverage if there are increased financial pressures like college tuition looming, substantial credit card debt, or retirement for a spouse that needs to be secured.
Your children may be on their own, or you no longer have a mortgage, so you may be able to scale back on your coverage. Before doing so, however, it makes sense to explore the concept of leaving a legacy. You may not have a “person” that needs your financial support, but you may have a charity or cause close to your heart that is in need of financial support. You could name that charity or cause as the beneficiary of your life insurance.
If you’ve been doing annual reviews or adjusting your life insurance coverage as you reach a major life change: marriage, divorce, new baby, “baby” graduates from college … then congratulations on a job well done.
Remember, insurance professionals are there to offer advice and guidance at every step, because, well, that’s their job – that part doesn’t change.
As your life progresses, converting your life insurance policy is something that you may consider.
This is a great question, but a better question to ask is: How much life insurance do I need at this point in my life?
Marriage, buying a house, the arrival of a new baby... these are events that change the very fabric of our lives.