Life insurance is a tool that provides financial security and peace of mind to you and your family. It serves as a safety net, ensuring that your family does not experience any financial constraints in the event of your untimely demise. However, your life insurance needs may evolve owing to additional responsibilities. Reassessing your life cover during significant milestones is imperative to ensure that the policy aligns with your current circumstance and future goals.
Milestones When You Need To Reconsider Your Life Insurance Cover
After understanding what is life insurance knowing when to review your life insurance is important. Here are some events in your life that prompt you to evaluate the sum assured in a term insurance policy.
Marriage
When you are single the financial obligations and expenses are limited. Your dreams and goals will be bigger post-marriage. Your life insurance coverage should align with your newfound financial goals. The need to reassess your life insurance coverage at this stage is crucial for the following reasons:
- As a couple, you and your spouse will be sharing all the financial obligations like loan EMIs. In the event of your untimely demise, your spouse may find it difficult to handle the responsibility single-handedly if there is no adequate life cover.
- An adequate term insurance cover will ensure that your spouse will not have any financial constraints and can maintain the same lifestyle, pay off debts, and achieve long-term financial goals even when you are not around.
- If you and your spouse decide to start a family, the responsibility increases further. You will not only have to think of the financial security of your spouse but should consider the financial needs of your child including childcare expenses, education, and other long-term expenses.
- After marriage, the need for updating the beneficiary arises. You may want the benefits to be directed to your spouse to provide the needed financial support in your absence.
Parenthood
The new arrival in your family will further transform your life. It brings a host of joy as well as additional responsibilities. Revaluation of your life insurance coverage at this stage is crucial for several reasons.
- Securing your child’s future will be a top priority. You will have to think of the well-being and the future education of your child. Your child’s upbringing and access to quality education will be at stake with a lack of financial security. A term life insurance cover that aligns with these needs will be the requirement at this point. With adequate financial support, nothing will be compromised even when you are not a part of the life journey.
- It is essential to reassess the coverage amount to provide for the mounting financial needs of your growing family. The term insurance policy that was enough for a couple will no longer be able to meet your family’s growing needs as parents.
- Naming a guardian in your policy is the next step. This is to ensure that your child will be taken care of by a trustworthy person in the event of both parents’ passing. The financial support provided by the policy will help the guardian fulfil his/her responsibility without difficulty.
Income Growth
When you switch your job for a higher income range or you get a promotion you fall into a different wealth bracket. Your social status and lifestyle will also be upgraded. In the event of your demise, your family will not be able to maintain the same lifestyle in the absence of financial security. You will have to reassess the sum assured at this stage to ensure that your family might not have to downgrade their lifestyle in your absence. The life cover should match your present lifestyle and financial status.
Ways to Realign Your Term Insurance Policy
You may wonder if you have to buy a new term insurance policy every time you have to shoulder a new responsibility to provide for it. This may not be necessary as some term insurance policies have an additional feature that enables enhancement in coverage at these important milestones in your life.
If your existing policy does not contain this feature you can buy a new term insurance policy online to cover additional financial need. This will increase your total coverage and ensure financial security for the increased financial need.
Also read: Insurance for Small Businesses: Top 5 Reasons to Get It
Conclusion
Life insurance is a tool that provides financial security to you and your loved ones. This financial security must be reviewed whenever there is an event that changes your life. For instance, when you get married, plan a family, change jobs for a higher income, etc.
Ensure that the coverage available suits your present needs and future goals. With the right coverage, your family’s present and future will be secured in case of any eventualities. Revisit your insurance at key life milestones to make informed choices and ensure your family’s security.
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