Life is never constant. We go through various stages. Life insurance is an important financial commitment and investment. Your life may have changed dramatically since you first purchased your life insurance policy. At every stage in life it is important to review your life insurance. You can review your life insurance policy by talking to your life insurance agent. You should review your life insurance if your life has changed in any way. Your should also review your life insurance policy when you make a major purchase. What is a major purchase? While there is no fixed definition of a major purchase, for the sake of life insurance, the following can be considered major purchases:
• new home,
• refinancing your home
• college education.
All these require substantial investments and should be covered in your death benefit to ensure your family isn’t burdened with the expenses if you die.
If you purchased your life insurance policy when you were single, you should review your policy when you get married and also change the beneficiary of your policy. The same holds true if you get divorced. You may not want your ex-spouse to be the beneficiary of your policy. Your life will change when you get married or divorced so in any case of a life changing event you should review your life insurance policy. A life changing event is any event that will significantly alter your life. A rule of thumb could be to consider a life insurance policy review when your life has seen a major change. If you have just become a parent, the first thing you need to do is to evaluate your life insurance policies. Check if it provides suitable protection at competitive rates, the appropriate amount of coverage and the correct beneficiary designations. Both parents should have sufficient life insurance to ensure that if something happened to one of them, the other can financially manage the family. Even a parent who is not working but staying at home should have life insurance to make it possible for the family to cover expenses, such as additional childcare costs. You should have enough life insurance to get enough to equal four to five times your annual salary. If you have purchased a life insurance policy before you became a parent, you should consider updating your beneficiary designations after the birth of a child.
Even if a few years go by without any major life changes, it is still a good idea to look over the terms of your policy again. Your financial circumstances may have changed. As your financial situation changes, your financial protection needs change and it is up to you to adjust your coverage accordingly.
Great article and comments. Hope you keep on keeping on. It was a joy to read.