Life insurance is an effective tool to guard against a catastrophic risk. While your death may not be likely or probable, it is possible. People pass away unexpectedly due to accidents or are diagnosed with terminal illness all the time, even at relatively young ages. Your death may create financial challenges for your loved ones. Life insurance minimizes the financial risk by paying a tax-free lump sum to your beneficiaries.
Perhaps you already have life insurance. Many people purchase it when their life changes. For example, you may have purchased coverage when you got married or had kids. Or perhaps you bought life insurance when you purchased your first home.
At first glance, you may not think your life insurance needs regular review. After all, as long as you pay the premiums, your policy is in force. What’s there to review?
Life changes quickly, though, and it’s possible that your needs and goals have changed. If you’ve experienced change in your life, this may be a good time to review your coverage. Below are three common life changes and how they could impact your life insurance needs:
Family and Dependents
Life insurance is commonly used to protect dependents against financial loss after the death of a provider. If you’re the breadwinner in your family and you pass away, your spouse and kids could struggle with debt and a lack of income.
If you’ve recently gotten married or had more children, it may be time to evaluate your protection. More people in the house means a greater potential financial need after your death. Your current level of protection may not be sufficient.
You also may want to review your coverage if you have fewer dependents in the home. For instance, maybe your children are grown and are financially independent. Or maybe you recently got divorced. In that case, you may not need as much protection. You also may consider keeping your policy but simply changing your beneficiary. A financial professional can help you develop the right strategy.
When you first purchased your life insurance, did you get an unfavorable rating or a high premium because of health issues? Has your health improved since then? If so, you may want to apply for a new policy. This is especially true if you’ve made a major change such as losing weight or quitting smoking. Even if you’re older, a new policy that gives you a better health rating could have a significantly lower premium.
You also may want to review your insurance if your health has declined. This is especially true if you have a term policy that’s expiring soon. Your term policy may allow you to convert to a permanent policy without going through underwriting.
Has your income increased in recent years? Did you get a promotion, change employers or maybe even start a business? If so, you may want to review your needs and coverage. In fact, the whole point of your insurance may be to replace your income if you pass away. If your income increases, so too does the amount that needs to be replaced.
Your life insurance coverage amount should be based on your family’s specific needs. How much would your spouse and children need to pay off debts? How much would they need to survive and pay the bills? Do you want to pay for any other goals, such as education or your spouse’s retirement? Again, a financial professional can help you answer these questions and more.
Ready to review your life insurance strategy? Let’s talk about it. Contact us today at Stoll and Basler Financial Services. We can help you analyze your needs and make the necessary adjustments. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
17962 – 2018/9/4