Chances are, you are worth more than you think. For those who carry a life insurance policy, there’s a good chance it’s not enough. For many people, they are surprised how little insurance coverage they have when they review their policy. There is often a major gap between how much insurance they have and how much their family would actually need.
Being under insured is a risk in any area, but having inadequate life insurance is not something you can fix later. Your family will simply be left with less than sufficient funds to provide for their needs if you were gone. As you get older, your life insurance needs change.
If you fail to update your policy as your life changes, you could find yourself grossly underinsured which can put your family in serious financial trouble. If you answer yes to any of these common questions you may need to increase your life insurance.
Do you own a home?
If you own a home, that is taking on a large financial obligation. In the unfortunate event of your passing, your family needs to ensure they can pay off the balance, or at least the monthly mortgage bill.
Are you in debt?
At a bare minimum, your life insurance should be enough to cover all of your debts including personal loans, credit card bills, student loans and other expenses. You don’t want to leave debts behind for your loved ones.
Are you married?
When you share your life with another, you share financial burdens. If your significant other can’t take care of all your financial obligations on their own you need to increase your life insurance. Term life insurance can serve as income replacement to help your loved ones pay for the bills and other necessities you would ordinarily be paying for. If you live in a two-income household, your life insurance must be sufficient enough to cover your part.
Do you have kids?
Bringing babies into the world is a wonderful, and expensive, time of life. Raising a child can cost a fortune, and your family will need financial support for the surviving spouse and family. Your life insurance should be increased with each child.
Did you recently get a promotion?
If your income changed recently, your life insurance should be increased to match. Often times with a promotion comes a nicer car, a new home, or a private school education. Whatever lifestyle you maintain currently, your life insurance should be sufficient to cover.
Did you get divorced or widowed?
A divorce or death in the family may cause your insurance needs to increase, or decrease. If you find yourself as a single parent, you may have more financial obligations. If you have no children, you may be able to decrease coverage if your financial obligations decrease with a divorce or death in the family.
Are you retired?
Retirement is a great time to reassess your insurance needs. Your spouse may be able to survive on your retirement or pension, but what about medical expenses or funeral costs? Your life insurance should still be sufficient to maintain your spouse and pay off any necessary bills at your passing.
Consider each of these questions each year, or when you renew your term life insurance policy. Contact your agent to make important changes to your policy to be sure it fits your needs and the needs of your family.
By Matt Reynolds - Google+