5 Times to Increase Your Life Insurance Coverage
Life insurance is a valuable financial tool that protects us, our families, and our assets in case of an unforeseen and tragic event. Could you imagine losing your spouse then losing your home because you can't afford the payments? Could you even think about leaving your kids thousands of dollars in debt because they have to pay for final taxes and funeral costs after you pass away? For many of us the answer is no.
It's tragic to think about it, but a loss of life comes with financial responsibilities. Just like with most things in life our financial needs are constantly changing and that's why it's smart to keep up to date on your life insurance coverage.
It's a good idea to review your life insurance policy when it comes up for renewal, but it's also a good idea to evaluate your life insurance coverage needs during life events and milestones.
Here are five times when increasing your life insurance coverage is a good idea:
After the big day as man and wife
Getting married is a major life event: it's the time in life when two incomes become one household. Having someone depend on you - or at least your income - for your portion of the household expenses is a big deal.
With your spouse as the beneficiary life insurance proceeds can help cover the loss of income and help maintain the lifestyle you had as a couple if one of you is suddenly single.
When you expand your family with kids
Think about the kids when deciding to increase your life insurance. What would happen to your kids if you or your spouse suddenly passed away? Just like getting married changes your life insurance coverage needs, so does having kids.
You can purchase a life insurance policy to help fund their college education, leave a financial legacy or pay for other expenses that you would normally cover.
If you buy a new house
Buying a new house is a big financial decision. It's probably the biggest purchase you'll ever make. What would happen to your investment if you should pass away? Would your spouse and kids still be able to afford the home?
Purchasing life insurance to cover the costs of your mortgage loan can help your family keep the home in case of a tragic event.
When your salary increases
A new job, a promotion, or a pay increase means more income - and that's a good reason to review your life insurance coverage. More income means a bigger contribution to the monthly family expenses. Life insurance can help substitute that income if it's lost due to a loss of life.
Life insurance can be purchased through an insurance company, your bank or through employee benefits with your employer.
If you have more debt
Contrary to popular belief, debts don't go away after you do. When someone passes away their debts are still owed and life insurance can cover the costs of outstanding debts so your loved ones don't have to. Just as debt isn't forever, life insurance doesn't have to be until death do you part. You can purchase term life insurance for 5, 10, 15, or 20 years.
If you've recently acquired new debt it's a good idea to increase your life insurance. The last thing you want is your family to have to sell off your investments and cash in your savings to pay off debts. Life insurance proceeds keep your assets safe and sound with your loved ones.