When Should You Review Your Life Insurance Needs?

Life insurance is often thought of as a one-time thing that should be taken care of and then forgotten about. This is not a wise way to view your life insurance goals. Individuals should review their life insurance needs and policies because life is always changing, and when your life changes, your life insurance needs change as well. However, reviewing and updating your life insurance policies does not have to be a hassle. There are quick and easy ways to review your life insurance needs when any of the following take place.

Income Changes

If your life insurance policy is less than seven times your annual salary, you may want to consider updating your amount. According to the Wall Street Journal, a general rule of thumb is that your insurance policy should be equal to five to ten times your annual salary. Most people go for the average of seven. Keep in mind, however, that this is a general rule and may not take into consideration any special circumstances that your family has.

If your income has increased substantially since you established your policy, then you will want to reevaluate your insurance needs. An increase in income is usually associated with a change in standard of living. You want to make sure that in the event of your death, your family will be able to maintain their standard of living.

Family Changes

Family changes will definitely warrant a reevaluation of your insurance policy. The birth of a child or the event of getting married will have a huge impact on the future goals for your family. Other events that can have an impact on your insurance policy needs include getting a divorce, the death of a family member, or a child leaving home. In some cases, these changes may warrant a decrease of insurance policy coverage as your responsibilities to your family change over the years.

Change of Beneficiaries

As changes in our lives take place, we may decide to change the beneficiaries on our policies. Keeping beneficiaries updated to your current wishes is very important. When there are changes such as a divorce and beneficiaries are not updated legally, your family could wind up in a very confusing situation with your ex-spouse. Keep beneficiaries updated to align with your current situation and wishes for the future.

Health Changes

Changes in health could provoke you to reevaluate your insurance needs, especially in the event of terminal illness. In most cases, people secure an insurance policy with the idea that it will be in the distant future when the policy will actually be needed. However, a health change could bring the distant future closer to the present. If you are concerned about the welfare of your family due to your health problems, you should update your policy to bring peace of mind both to yourself and to your family.

Retirement

Retirement changes everything, and it is a great time to look over your financial plans to make sure you have accomplished what you intended when you started out. In most cases, once you reach retirement, your children have moved out of the home and are established in their own homes. So, your financial responsibilities to them will have changed and your insurance policy may need to change as well.

When life changes, your insurance policies will need to change as well. Life may feel like a whirlwind at times, but don’t let that stop you from re-evaluating your plans to make sure you are covered properly.

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