Signs You Need To Change Your Life Insurance Policy

A life insurance policy involves regular payments to an insurance company or an employer. People designated as beneficiaries receive an agreed-upon sum upon the person’s death.

As time passes, one’s needs and priorities change. Naturally, it becomes important to review and reconsider a life insurance policy frequently.

Below are some signs that help people understand when to change their policy.

Employer Provides Life Insurance Coverage

Employers sometimes provide life insurance one to two times a worker’s annual salary. This is generally at a low cost or free. While it’s a wonderful perk, the coverage might not be enough for a family to make ends meet or pay off debt.

Add up your monthly expenses, such as bills and mortgage payments, and then consider your long-term financial commitments. Consider increasing your life insurance coverage if the current coverage cannot cover these expenses.

Insufficient Coverage

If one’s health, career, family situation, or overall financial situation change, it’s time to consider getting more life insurance coverage.

If one’s savings, property, and other assets don’t cover all your financial obligations, consider changing the existing policy or taking out an additional life insurance policy. Contact your current insurance company and consider options for increasing the policy coverage.

Bought the Wrong Policy

If the current insurance policy is not suiting one’s lifestyle and needs, change it. For example, it’s possible to cash out an existing whole-life policy and switch to a less expensive term policy.

This will help you avoid missing a payment, having the insurance expire, or losing coverage. Although term life insurance policies have expiration dates, the cost of coverage is typically lower.

Too Much Coverage

For example, you might be healthy but pay a monthly premium for a more expensive coverage that doesn’t require a medical exam.

Or perhaps you still have insurance that covers the costs of a growing family even after your children or other dependents have moved out.

In such situations, it’s better to adjust the existing life insurance policy.

Beneficiaries Change

It’s a good idea to reevaluate life insurance coverage in new circumstances like birth, divorce, marriage, home acquisition, demise, or a new career. Ensure that the list of beneficiaries is up-to-date. Allot a specific percentage in case of multiple beneficiaries.