One of the most important things you can do for your loved ones is to buy life insurance coverage on yourself. Once you have it in place, it's easy to forget about it until the annual premium comes due.
A yearly review of the policy is usually enough. Still, there are a few times in your life when you'll want to consider making changes to the coverage amount.
- When you get married. Marriage isn't a joint venture; it's a partnership that you plan to stay in for the long run. Your partner may or may not have a job that would allow them to get by without your income. They may bring children with them, which could your income won't stretch quite as far as it once did.
- When you have a baby. With each child that joins your family, you should consider increasing your life insurance. For at least the next 18 years you'll have the extra costs of clothes, diapers, food, toys and education. You should also check your coverage if you're taking care of another child that isn't yours. This would include nieces, nephews or grandchildren.
- When you become an empty-nester. As you enter this stage of life, you're not responsible for your adult children. You might want to drop your coverage down since your income only needs to support your partner. You may have saved up a large enough nest egg. Life insurance money, in the event your partner collects it, is not a game changer. Still, it also may be essential. Only you can make the decision whether to decrease coverage.
- When you retire. Many people who buy term life policies calculate them to end around this stage in their life. As you head into retirement, consider whether you need to keep your policy. It would be one less cost to have, but it also guarantees your partner some money when you pass. The less money you have saved for retirement, the more you should have in life insurance. This goes for your partner, too.
Even if you have your life insurance payments set up on auto pay, set a reminder to check them yearly. Consider how your family members’ lives will change if you pass. Then, make an educated decision. You may need to increase or decrease your coverage. But also think about the expenses you have now. Don't forget to include those you anticipate in the next few years. If you're still unsure, contact your financial advisor to help you weigh the pros and cons of changing your coverage.
Your insurance agent can also help you decide how to structure your life insurance. Contact us today for more information.