Life insurance is a core element in any financial strategy, especially for those who have children or other dependents. Your spouse, children and other loved ones rely on you for financial security. If you pass away, they could face debt or even a lack of income. Life insurance provides a tax-free lump-sum death benefit to mitigate that risk.
Many people purchase life insurance when they get married, buy a house or have children. As your financial responsibility increases, so too does the risk associated with your death. It makes sense to use these major life changes as an opportunity to buy insurance.
It’s likely that you’ll have more major changes throughout your life, and it’s possible that your life insurance needs could also change. Below are three common life changes that can impact your need for life insurance. If any of these sound familiar, it may be time to meet with a financial professional and review your coverage.
Many people purchase life insurance to protect their family. If that’s the primary reason you purchased life insurance, a change in your family status could trigger changes to your coverage. For instance, maybe you had more children. If so, you probably have an increased life insurance need.
It’s also possible that you got divorced or perhaps that your children are grown and have moved out of the house. In these situations, you may have fewer dependents who rely on you financially. You may not need as much life insurance protection and may want to reduce your coverage.
Has your health improved significantly since you first purchased insurance? Maybe you’ve lost weight or quit smoking. Maybe you had a surgery or condition that no longer affects you. It’s possible that those issues hurt your rating and increased your premium. If you’ve made positive health changes, you may want to consider a new policy with lower premiums.
It’s also possible that your health has declined since you purchased your insurance. For example, maybe you’ve been diagnosed with a chronic illness or suffered a serious injury. This is an important consideration if you have a term policy that’s expiring soon. Many term policies allow you to convert to a permanent policy without going through underwriting. That means you could possibly get permanent life insurance despite having a serious condition. Your financial professional can help you understand your options.
Has your income increased significantly since you first bought your policy? If so, you may want to review your needs and coverage. In fact, the whole point of your insurance may be to replace your income if you pass away. If your income increases, so too does the amount that needs to be replaced.
Your life insurance coverage amount should be based on your family’s specific needs. How much would your spouse and children need to pay off debts? How much would they need to survive and pay the bills? Do you want to pay for any other goals, such as education or your spouse’s retirement? Again, a financial professional can help you answer these questions and more.
Ready to review your life insurance strategy? Let’s talk about it. Contact us today at M&P Personal Financial Planning. We can help you analyze your needs and make the necessary adjustments. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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