Whether you purchased life insurance in your youth or well after getting married and having children, there are certain life changes that can happen that will require you to make adjustments to your policy. It’s recommended that you make the needed changes to either provide more coverage for new assets and people in your life or to downgrade to save money. Depending on your life situation, you will need to do either or. Read on to see what life changes require you to make updates to your life insurance.
You Take On New Responsibilities
You’ve likely heard advice given to young people that it’s best to purchase life insurance now. Waiting until you develop an illness or age will only hike up your rates. A lot of young folks listen to this advice and purchase a policy that will cover their funeral expenses only. However, as time goes on, you may take on new responsibilities like co-signing a business or personal loan or caring for an elderly or sick parent. With these types of obligations weighing on your shoulders, it’s a good idea to adjust your life insurance so that it will cover them.
You Get Married or Divorced
When you get married and have children, this doesn’t constitute a need for life insurance, especially if both spouses are working and equally contributing to expenses. In this case, the death of one wouldn’t be too catastrophic for the other. However, the situation changes when the two of you purchase your first home together. You’ll need to purchase or upgrade your life insurance policy to cover the newfound expenses. This is especially so if one works and the other doesn’t. In the event of a divorce, life insurance can be changed to reflect the obligations you now have.
Even if one spouse stays home and the other works, it’s recommended that both parents get a life insurance policy. If the breadwinner were to pass away, the stay-at-home parent would have to endure the expenses. Then, if the stay-at-home parent were to pass away, the breadwinning parent would have to endure childcare costs. It’s important to factor these in when purchasing or making changes to your life insurance policy.
There are many different changes that can happen in your life that can require you to upgrade or downgrade your life insurance policy. It’s important that you don’t “set it and forget it” once you buy a policy. Continuously make changes as needed, so that if you were to pass away, your loved ones won’t be financially devastated.