Life insurance is easy to forget about it once it’s in place, but just like any other kind of insurance, it isn’t ‘set it and forget it.’ As your life changes, so does your need for coverage. And if you find yourself underinsured, you could be putting your family at risk if something happens to you.
Certainly, if you have a family that relies on you for support, you need life insurance. And even if you’re single, life insurance can still add value by covering the cost of your funeral expenses, which could add up to thousands of dollars. Plus, if someone has co-signed loans for you, life insurance will keep them from being stuck with the bills after you’re gone.
When you have life insurance but it’s not enough to cover the financial needs of the people you leave behind, you are underinsured. If your family relies on you for support, make sure you leave them with enough money to cover expenses without your income.
Most people need 10x the life insurance coverage they get through their employer. Do you have what you need to cover your outstanding obligations after you’re gone? If you haven't reviewed your policy in a while, you may be underinsured. Take our short, 2-minute self-evaluation to find out.
If any of these situations apply to you, you may want to consider increasing your life insurance coverage.
It’s natural to find that a family’s lifestyle changes as income changes. So, if you earn more money than you used to, consider increasing your life insurance amount to make sure your family can carry on without you, without having to make drastic cutbacks.
A new home typically means a new mortgage. Your life insurance should be enough to pay off your outstanding mortgage balance. If it cannot, you need to increase your coverage.
When your family grows, so does your need for more insurance coverage. Kids cost money, for daycare, orthodontics, sports, weddings, college, and much more. And those expenses add up when your family grows. Make sure expenses for all your children are covered.
Think a stay-at-home spouse doesn’t need life insurance, just because they don’t earn wages? Think again. If something happens to him or her, you may need to pay for things like childcare, house cleaning, meal prep, and others just to keep things going. Life insurance can cover all that and more.
If you lose your job or switch employers, this insurance often goes away. Plus, group life policies offered by your employer typically only cover one to two times the amount of your annual salary, which is usually not enough to adequately care for your family. Most people need 10x the life insurance coverage they get through their employer.
Can you be overinsured? It’s possible. If you have paid off your mortgage, reduced your debts, you’re an empty nester, or you’ve downsized overall, you may not need as much life insurance as you currently have. Let a licensed expert at Policygenius be sure you have the right coverage for your current needs. Go to Policygenius
How much is enough? It takes just a few minutes to figure this out. First, total up your debts and mortgage, then add several years’ worth of annual living expenses; this will help your family meet their daily needs, at least for the first few years. Then add enough to send the kids to college. Finally, include enough to cover medical bills and funeral expenses.
If this is the case, take steps now to add more coverage. Otherwise, your family will be burdened to make ends meet during a time when they’re also struggling to get by without you.
Once it’s in place, life insurance is easy to forget about. But consider how much your life has changed over the past five or 10 years, then match your current financial situation against your insurance coverage. There’s a good chance they don’t line up. You’re likely paying for either too little or too much coverage, and neither is a good use of your money. A review can be quick and easy, especially with the right insurance broker.
There are dozens of reasons your goals and corresponding insurance needs change over time. For example, if you’ve purchased a vacation home, make sure your life insurance covers both mortgages. Consider a special policy to provide your children and grandchildren with an inheritance or one that could provide long-term care or retirement benefits. Life insurance can be configured in many ways; make sure yours matches your financial goals.
It’s common for people to lose track of their insurance coverage over time. But don’t wait until it’s too late. It takes just a moment to update your life insurance coverage. Give yourself peace of mind and make sure your family is protected.
Looking for a life insurance shopping tool? Policygenius allows you to quickly and easily compare personalized quotes from the nation’s top insurers to find the best policy and rate for you. After you pick a quote, a licensed expert at Policygenius will give you a call to discuss your selection and help you make sure it's the best fit for your financial needs. Get started today!
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