There are many events in life that will impact your need for life insurance. It may come as a surprise to learn how often your life insurance needs change.
Growing your family comes with a number of additional financial responsibilities. The purchase of a life insurance policy is one way to protect your child’s financial future.
You share financial responsibilities with your spouse. For this reason, it is important that the two of you design a financial plan that includes life insurance. When purchasing your life insurance policy, it is important to consider a policy that will cover the loss of a spouse’s financial contribution.
Your mortgage is one of your biggest financial responsibilities. Should you die, your life insurance policy can cover this expense as well as other costs such as maintenance, unexpected repairs, taxes, and even household bills. By purchasing the appropriate life insurance policy, your spouse or family members can remain in the home you purchased.
Taking on debt
Life insurance can help pay off your outstanding debt. Whether it is old, new, or future debt, your life insurance policy can cover these balances so your loved ones are not solely responsible. Debt management and life insurance should play a major role in your overall financial plan.
Promotions tend to change more than our bank accounts— they also change our spending habits. That is why when your salary increases, your life insurance needs increase as well. Many experts agree that your life insurance policy should be 10-20 times your annual salary. To help maintain the lifestyle your family has grown accustomed to after a promotion, you may want to consider increasing the amount of life insurance you have.
Caring for aging parents
Life insurance can help maintain the level of care your aging parents have been receiving should something happen to you unexpectedly. It is recommended that individuals who are financially responsible for their aging parents calculate the cost of healthcare, a long-term care facility, and other expenses when determining the benefit of a life insurance policy.
Your life insurance policy also protects your business. Reexamining your life insurance coverage when your business becomes more profitable, hires key employees, or even acquires more debt, will help to ensure it is protected.
Changes in marital status
Reevaluating your life insurance needs after a divorce or loss of a spouse is a good idea, as you may find that you now require less life insurance. This may not necessarily be the case if you have children since they will remain your primary financial obligation. It is recommended that you first guarantee that your children will be financially stable before decreasing your life insurance coverage. Remember, if you remarry you should reevaluate your life insurance coverage to ensure your spouse’s needs are provided for as well.
Planning for college
Life insurance will help ensure your child’s college plans remain feasible should a loss occur. Having the right life insurance policy can help with your child’s tuition, as well as room and board.
Planning for retirement
Retirement planning is an ideal time to reconsider your life insurance needs. As you examine your financial plan, take the time to make sure your loved ones are protected financially.