Do You Need to Readjust Your Life Insurance Policy?
Life insurance is an important part of your financial plan at every point in life, but the type of policy you carry should be adjusted to match the stage in life you are in at any given time. Many factors need to be considered when deciding what attributes your life insurance will possess. Are you single or married? Do you have children? Do you have a mortgage? Do you have any savings? It's important to be aware that your life situation will change and your life insurance policy may need to change as well.
Your life insurance policy may need some adjustment if certain life changes have occurred. Regardless, you should review your policy every three to five years to ensure it still makes sense. If you have dependents and debts but your total life insurance coverage is less than ten times your current household income, you may want to readjust coverage options. If you get married, get divorced or become a widow be sure you adjust your policy and change your beneficiary accordingly. When you have a baby or adopt a child life insurance needs usually increase. When they leave for college or they become independent, your needs may decrease.
Also consider reviewing your policy if a partner has a serious illness or disability or they lose significant income. If you move or upgrade your living situation and have a larger mortgage, you may want more life insurance coverage to cover costs. If you end up starting your own business your life insurance needs will be different. Another thing to consider is if you have or will have the responsibility of caring for an aging parent. This too could change your life insurance needs. So, take the time necessary to determine if the policy in place still makes sense in your current stage of life.