Here's when you should increase your life insurance coverage
Life insurance provides a financial safety net via a sum of money to select beneficiaries following the death of the policyholder. Millions of Americans currently have such policies in place to protect themselves should something go wrong.
Sometimes this is through an employer, sometimes it's directly via a provider and other times it's a combination of both. And when those fall short they rely on supplemental life insurance to fill the gaps.
While many people can agree a life insurance policy is a good investment, it's important to regularly review your coverage - particularly when you undergo significant changes in your life. If you believe it may be time to reevaluate your plan or get a new one, you can start by getting a quote today.
When should you increase your life insurance?
Whether you have a lot or a little, there are reliable guidelines for when you should increase the life insurance you have. It's generally agreed that certain life events should trigger a bump in coverage.
Here are three scenarios in which you should consider raising your life insurance coverage.
Your work policy isn't enough
Many workers have life insurance coverage via their employer and just leave it there. But what happens if that's not enough? Think of the expenses you and your family have that are currently paid via your salary. Will the insurance payout cover everyone in the event of your death? And even if it does, how long will that last?
Do a realistic review of the coverage your employer provides. If it's just basic life insurance that will fill in the gap for a year - and your death left years (if not decades) of lost income - you should probably increase the coverage you have.
If you think this scenario applies to you then get a free price estimate to see exactly how much you're eligible for.
You're making more money
While a raise in your paycheck always helps it may be time to raise your coverage accordingly. If the coverage you previously had was limited to what you could afford - and now you can afford more - you should probably consider increasing the amount you have.
Also, if the new salary has caused adjustments in your standard of living (think: new, more expensive bills for things like cars, homes, etc.) you're going to need to have protection to ensure that these can continue to be paid in your absence.
You've hit a traditional life milestone
Have you recently gotten married, had a child or bought a house? All three are reasons to increase your life insurance coverage. As your life changes and the bills and responsibilities rise with it, you'll want to make sure that you have life insurance for a commensurate amount.
For example, if you were single then life insurance in the amount of an individual earner should suffice. But if you're now married, you'll want the protection for two. Increase it again for each child you have.
If you have recently purchased a home then you'll have years - if not decades - until it's paid off. Increase your life insurance coverage to help pay the balance should your death leave a hefty mortgage payment to account for. You can get a free price quote for a policy now.
Other times to increase your life insurance
While the above scenarios are reliable ones for when to boost your life insurance coverage, they aren't the only times you should consider doing so. Here are four other times it may make sense to increase your life insurance:
- You have long-term debt. Home purchases aren't the only type of long-term debt that could necessitate an increase in life insurance coverage. If you have student loan debt, for example, it may make sense to have life insurance coverage in an amount that could cover what you owe. This would also apply to other traditional debts. If they're significant, have a long shelf life and could saddle your beneficiaries with financial headaches, then it's probably worth increasing your life insurance coverage to pay off what's outstanding.
- Your partner is no longer working. If your spouse or partner is no longer employed, regardless of the reason, you should think about bumping your life insurance protection. Two salaries - and two insurance policies - are better than one. Should you reduce or eliminate one of those then you'll want to make sure you have a commensurate level of protection by increasing the amount of life insurance you have.
- You're taking on additional financial responsibilities. If you're being relied on financially for new expenses (think college costs, new car loans, etc.) then you'll want to boost your coverage to make up for those expenses in the event of your death.
- Your long-term plans have changed. Are you taking care of (and financially supporting) someone that you weren't planning on helping? It may be smart to increase your coverage amount to cover the gap you could potentially leave. Speak with a life insurance expert who can help you determine if this makes sense for you.
While these reasons are some of the more important to increase your life insurance protection it doesn't mean they're the only ones. Do an honest assessment of your life, your family, your home and your finances. If you can afford to pay for life insurance to cover these expenses it's probably worth increasing your coverage. Get started with a free price quote today!
