When Should I Review My Life Insurance Policy?
It is advisable to review your current life insurance policy when some major changes in life occur to you. Some of the significant life events include:
Relationships
One possible reason to review and adjust your life insurance plan would be changes in relationships. For instance, you may have been single when you took out the plan but may now be living with a partner or married. On the other hand, you may have been married and are now divorced or with a different partner.
Family additions
You may have taken out your life insurance cover when you had no kids or had fewer children than you have now. The addition of another child or children to the family makes a huge difference to finances, as you will need to consider the cost of bringing up the child/children, paying for clothing, increased food costs, education etc. Again, this would mean that you need to make changes to your life insurance coverage levels accordingly and may also mean making changes in terms of the beneficiaries of the benefit.
A rise in the number of financial commitments you have
Since you took out your life insurance plan, you may have taken on more financial commitments, such as a mortgage or a car loan. With these increased debts to deal with, your family could be left with nowhere near enough benefit to cover necessary costs and commitments in the event of your death unless you make changes to your life insurance accordingly so that the level of coverage is adequate and takes into consideration these increased financial commitments.
An increase in income levels
The amount of income you are bringing in may have changed radically since the time you took out your life insurance plan initially. This means that you will most likely have become used to living on a higher income, have become used to a different lifestyle, and may have taken on increased financial commitments in line with your higher income levels. This means that you would need to consider altering your level of coverage.
Repayment of debts
Your insurance needs will decrease as when your debts are repaid and there will be less financial commitments to meet in the future.
Changes to the beneficiary
You may find yourself in a situation where the main beneficiary of your life insurance benefit has actually passed away, which means that you will have to make alterations and name someone else as the beneficiary. Another scenario is that the main beneficiary is no longer a part of your life, such as in a relationship breakdown, in which case you would again need to look at making changes so that the benefit goes to the person you want it to go to.
