Why You Need to Monitor Your Life Insurance Coverage
Life Insurance Coverage
Depending on the policy you purchase, you could be covered for different lengths. The term could be anywhere between one year and the rest of your life by life insurance. Depending on how long you’ve had you life insurance coverage, it might no longer be enough.
As your life changes, your insurance needs change with it. Depending on events that have happened and how your mind-set has evolved since you first bought a policy, it may be a good idea to make sure you have enough coverage. Here are some signs to watch out for.
1.You’ve recently had a child.
Research has found, it will cost you €250,000 to raise a child from birth to college in Ireland. It is also estimated that the cost of education for a child is €70,000.
If you’ve recently had an addition to your family, your spouse or partner may not be able to afford those costs if something were to happen to you. That’s especially the case if you’re the financial breadwinner.
2.You’ve bought a new home.
Two of the top five reasons people get life insurance are to cover mortgage debt and to pay for home expenses.
You do not want your family to be kicked out of your home if they can not pay this. When taking out a mortgage you need to consider what will happen if someone becomes ill, dies or unemployment occurs. Mortgage protection is put in place and designed to pay off your mortgage in such an event as death. There are difference kinds of mortgage protection so make sure you know the difference. It is very important that this is reviewed often especially when your circumstances change and to make sure you are on the right policy to suit your needs.
3.Your income has increased dramatically.
Two-thirds of people who own life insurance bought it to replace lost income if they were to pass away. If you’ve recently gotten a significant raise or your income has increased steadily since you last bought insurance, check to make sure your insurance coverage is still enough to replace it.
4.Your lifestyle has changed.
While income increases often come with lifestyle changes, it’s also possible to get a lifestyle upgrade. This is after you’ve paid off debt or improved your cash flow in some other way. If you notice that you’ve been spending more per month than you were a year or two ago, your current life insurance policy may leave a gap between its coverage and your loved ones’ needs.
5.You’re thinking about your estate planning.
Another top-five reason people get life insurance is to transfer wealth or leave an inheritance. As you get older, you may start thinking more about what kind of legacy you want to leave behind.
If you’ve been focused on other life insurance needs, it might be time to take another look to see if you would owe any taxes upon your death or what other expenses your estate might incur. You may also consider whether you want to leave any money behind for your children. In most cases, you won’t be able to increase the coverage on your current policy. Instead, you’ll buy a new one to supplement the first.
Whatever you do, take the time every once in a while to determine whether your life insurance coverage is still enough to take care of the people you love.
If you want to review your life insurance policy we are always here to give you free advice and provide you with our expert financial and life insurance advice for your future and your family. Contact us today for a chat.